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What Credit Scoring Model Do Mortgage Lenders Use
There are so many different platforms and portals where you can get your credit scores, and every portal has a different credit score for each individual consumer. I am mainly interested in what credit scoring platform mortgage lenders use? Mortgage companies pull a tri-merger credit report, which is they pull a report on Equifax, Experian, and Transunion and use the middle credit score. If a mortgage loan borrower wants to see what his mortgage credit score is without going to a mortgage broker or mortgage lender, which credit scoring platform should they use? Credit Karma, Credit Sesame, Experian, MyFICO, Smart Credit, Credit Wise, all have different algorithms it seems like because every one of those credit reporting and scoring companies yields a different credit score for each individual consumer. For Example, Credit Karma yields a 530-credit score on Transunion for me and Experian.com yields a 642-credit score on Transunion. Why such a large difference? What Credit Scoring Model Do Mortgage Lenders Use.
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1 Reply
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I will look for up-to-date information on mortgage credit scoring models and the distinctions among consumer-facing platforms.
Here’s the key takeaway: mortgage credit scores can differ substantially, and the main reasons are the scoring models used and the platform shown to consumers.
Mortgage Lenders and Credit Scoring
What Mortgage Lenders Still Use:
Traditionally, mortgage lenders used the “Classic FICO” scores, which means the following and helps explain the scores used in mortgage decisions:
- FICO Score 2 (Experian)
- FICO Score 4 (TransUnion)
- FICO Score 5 (Equifax)
These older mortgage-focused scores are not FICO 8, 9, or 10, and they focus on the stability of the consumer’s payment history.
What is Changing (July 2025):
The FHFA (Federal Housing Finance Agency) announced a July change: mortgage lenders will now have the option to use VantageScore 4.0.
https://gustancho.com/fico-and-vantagescore/
gustancho.com
FICO and VantageScore: Which Should You Use for a Mortgage?
Difference between FICO and VantageScore is the VantageScore is 50 points lower. The FHFA now requires using VantageScore 3.
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