Mortgage credit scores ratings?

[Kenny]

I’m looking into refinancing a home loan. I did my homework, logged to my credit monitoring service and checked my credit scores ratings. My 3 in 1 credit score was pretty good – around 760, take or leave a few points.

So I contacted a mortgage company to look into refinancing my home. But when they pulled my credit, the scores – they were ~50 points lower than what I got a day before. It may not sound much, but when refinancing a home it can mean a lot of money!

Does anyone know why?

[Roy]

Credit scores ratings has different versions

Kenny, it’s very common for the financial institutions to come up with a different score than what you get from your bank/monitoring service or any other source.

There are two main reasons for this:

To start with, not all scores are the same. Mortgage companies used FICO almost exclusively, while credit monitoring services use FAKKO scores, which is a generic name to any credit scores ratings other than FICO. These score use different formula than FICO so you can’t really compare them. The only place to get a FICO score is myFICO.com.

But even if you got you FICO score from myFICO it would be different from what the mortgage company came up with. Mortgage lenders look at the “Factual” credit score and that score is not available to the general public.

There are actually 3 variations to the FICO score, specially adapted according to the user.

The one you see is called the “Standard”. This is the only version available to you as a consumer.

In addition to the “Standard” there are two specially tailored versions:

1. The “Auto enhanced” which only car dealer and lenders see.
2. The “Factual” version which as I said above only mortgage lenders see.

Each version is designed according to these users’ specific requirements, and neither the “Factual” nor the “Auto enhanced” scores are available to the general public.

It’s not uncommon for those 3 scores to be off by as much as 100-points.

Unfortunately – the score that counts in your case is what the mortgage company came up with.

Hope this helps.

[Author]

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