Which Credit Report is Used when Applying for a Mortgage

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     When considering a new mortgage, it only makes sense that you review the same credit report that the bank/lender will use once you apply. There are three main credit reporting agencies which the majority of home lenders pull credit from when you apply for a mortgage, both when buying and refinancing. FICO® scores based on reports may vary between the three, but your middle score of the three is typically used when qualifying for a mortgage.
          The term FICO® scores and Credit Reports are interesting, read on if your curiosity is strong right now, or skip to the next section to continue.
FICO (Fair Isaac Corporation) was founded in 1956 by an engineer and mathematician. At this time credit cards were gaining popularity, and the credit limit to offer somebody became increasingly difficult to determine, especially if the one applying was in a different geographical region. Think about this, before the common credit reports we have today, a decision to administer credit was based largely on subjectivity and whatever a collection bureau happened to have notes on that person at the time. FICO created a credit scoring system in 1958 to help bring objectivity to the world of credit decisions. During the same time, the value of consumer data was realized, and three main collection companies came about. They each had niches in the consumer data market, and that is why the scores of each are still used today. Take payment history and consumer behavior and put it into an equation which weighs the factors, and out pops your FICO® score. It’s surely more complex than that, but you get the idea. For more information on how much of an impact your score can have on your next loan, check out this educational webpage: https://www.myfico.com/credit-education/credit-report-credit-score-articles/






The three main reporting agencies are: Equifax, Transunion, Experian

Each agency will produce a report including what lines of credit you have (trade lines) and your payment history on those lines, as well as identifying information, recent addresses, and a list of when you pulled or had credit pulled within the last two years. A FICO® score can then be ordered to summarize the findings of these reports into an easy to compare number. Remember that a FICO® score is just a number which can be used to summarize an agency’s report. Depending on what that agency has records for will determine what goes into the equation that produces your FICO® score. This discrepancy between FICO® scores leads to an opportunity for the first step in improving your credit score. Check back soon for the first step or reach out to me if you need to improve your credit before your next mortgage.


Maverick Johnston
509-230-0768
NMLS ID #1668965
Location: Spokane, WA, USA

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