Mortgage-Specific Credit Scores

For example, if one spouse has a middle score of 740 and the other has a middle score of 700, the lender uses 700 as the representative score for the joint application.

How Do Mortgage-Specific Credit Scores Impact the Mortgage Process?

Mortgage-specific credit scores can have a major impact on your mortgage.

Overall Loan Eligibility

Lenders use your mortgage-specific credit score to assess your ability to repay the loan. A higher score improves your chances of qualifying for a mortgage, while a lower score may lead to a denial.

Interest Rates

Lenders view higher credit scores as an indicator of lower risk, which translates to lower interest rates. A lower interest rate reduces your monthly mortgage payments and the total interest you’ll pay over the life of the loan.

Down Payment Requirements

Your mortgage-specific credit score can impact the down payment you’ll need to qualify for a mortgage. Borrowers with higher credit scores may be eligible for low-down-payment programs that make homeownership more accessible.

Loan-Level Price Adjustments

Loan-Level Price Adjustments (LLPAs) are risk-based fees lenders assess to compensate for higher-risk loans. One of those risk factors is your credit score. Your lender will let you know if you owe a LLPA — and if so, how much it will be. It's worth noting that you can reduce — or even avoid — the LLP if make a larger down payment.4

If you see an LLPA charge on your estimated closing costs, ask your lender how much more you would need to put as a down payment to reduce, or eliminate, this fee.

How To Obtain Your Mortgage-Specific Credit Scores

Knowing your credit score before applying for a mortgage can help you prepare and avoid surprises. Here’s how to get it.

• myFICO. Order a one-time report or sign up for a subscription, giving you regular access to your FICO Scores.5 Be sure to choose the option that includes scores from all three bureaus and access to mortgage-specific scores.
• Credit bureaus. Purchase credit scores directly from the three major credit bureaus but know what you’re getting. For example, Equifax only provides consumers with reports that show their VantageScore 3.0 based on Equifax data.6 That score could be different than your mortgage-specific credit score.
• Credit counseling services. Some credit counseling agencies offer services that include obtaining your mortgage-specific credit scores. These agencies can also provide guidance to help you improve your scores.

How To Improve Your Mortgage-Specific Credit Scores

To improve your credit before applying for a mortgage, pay your bills on time and keep your credit utilization ratio low on revolving accounts like credit cards and lines of credit—below 30%.7

But be careful if you request a credit limit increase to lower your credit utilization ratio. That strategy can backfire on mortgage-specific credit scores.

A credit line increase triggers a hard inquiry on your credit report, which lowers your credit score by a few points.8 In addition, higher credit limits may negatively impact your mortgage-specific credit score, since it suggests you could become overextended in the future.

A better idea is to pay down debt to improve your credit utilization. This shows responsible credit behavior, which can help you qualify for a mortgage with the most favorable terms possible.

If you pay off your credit card bills in full every month but charge a lot to take advantage of rewards, this can also make your credit utilization look high.9 Consider paying off your credit card in full twice a month — or even once a week — in the months leading up to applying for a mortgage. This will help keep your credit utilization low without upping your credit limit, which may decrease your mortgage-specific credit score.