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How Do Mortgage Lenders Determine Your Qualifying Credit Score?

Calculating Your Qualifying Credit Score for a Home LoanIn a typical mortgage application scenario, a home buyer will have 3 credit scores: one from TransUnion, one from Equifax, and one from Experian. If you’re applying for a mortgage, it’s important to understand your credit score and know which of the 3 credit scores provided will be used to determine your mortgage eligibility, as the numbers can vary significantly. Keep in mind that lenders will typically choose the middle credit score to use when determining your mortgage eligibility.

Let’s use the examples below to help us better explain qualifying credit score:

Determining the Qualifying Credit Score of a Single Borrower

John is looking for a home loan and will be the only borrower on the mortgage. When John applies for a mortgage and has his credit score pulled, he will receive three scores. Let’s say those scores are 695 (TransUnion), 655 (Equifax), and 682 (Experian). The higher and the lower numbers will be removed and the middle score, the 682 from Experian, will be the qualifying credit score.

In cases where a mortgage applicant may only receive one or two scores, lenders must use their lender specific guidelines to decide what the qualifying credit score is. In most cases, lenders will normally choose the lower of the two credit scores when only two are given.

Determining the Qualifying Credit Score of Co-Borrowers

Let’s now use another example in which John has a co-borrower, his wife, Brenda:

Let’s assume Brenda has much higher credit scores than John.  Her scores are 767 (TransUnion), 752 (Equifax), and 764 (Experian).  Brenda’s middle score is 764 (Experian).

In this example, John has a 682 middle score and Brenda has a 764 middle score.  It is important to note that when two borrowers are applying for one loan, the LOWER of the middle scores is used.  In this case, the lender will use John’s 682 as the qualifying credit score.

Calculating YOUR Qualifying Credit Score

Wondering what your credit score is and what kinds of mortgages you may qualify for? If so, the mortgage professionals at Maple Tree Funding can help!

If you are interested in purchasing a home in New York, we can help you determine your qualifying credit score, calculate how much you can afford to spend on a home and help you understand the mortgage options available to you. We will guide you every step of the way, from mortgage pre-qualification to the closing table, helping you to secure the mortgage that is right for you and your budget.

We work with clients of all kinds, from first time homebuyers and individuals with less-than-perfect credit to homeowners looking to refinance their current homes. As a mortgage broker based in Upstate NY, our broad spectrum of home loan options includes government mortgages, conventional loans, fixed rate loans, adjustable rate mortgages and more.

Interested in taking the first step towards owning a home in NY? Give us a call at 518-782-1202 or contact us online today and we’ll calculate your credit score and get you started on the path to homeownership!

Editors Note: This post was originally published in 2014 but has been updated as of March 2017.

Posted in FAQs, First Time Homebuyers on Friday, March 10, 2017 by Shane Latza