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If my "FICO" credit scores from all 3 credit bureaus are good, what other credit scores do I need to know before I apply for a loan, and how do I get those scores?
September 20th, 2010 - Posted by Tasha
Q: If I get my "FICO" credit score from all 3 credit bureaus and they are all within the same range (+/- ten points), what other credit score do I need to know before I apply for a loan, and how do I get that score?
A: You've taken a huge step in the right direction, as FICO is the most prevalently used credit score by lenders. I also give you kudos for knowing that you have 3 different credit reports, one from each of the 3 credit bureaus. I'm assuming you've read through each of your credit reports, to ensure they all contain accurate information. Although you mention that your scores are pretty much the same across all your credit reports, there may be some sort of discrepancy which accounts for the 10 point difference. Probably not anything big, but it does pay to fix any errors.
There are other companies that provide credit scores, but they generally use the same criteria as FICO (read about how your FICO score is calculated). The 3 credit bureaus – Equifax, Experian and Transunion – each have their own brand of credit score. Some major credit issuers have also developed their own branded scores. Since all these scores are based on your credit history, as long as your credit history and FICO scores are in good shape, you should be OK.
Instead of worrying about all the different scores out there, it makes more sense to take a look at other factors creditors consider when extending a mortgage or other type of loan. In addition to your credit scores and credit reports, potential lenders examine criteria like your income and employment history. They then take all this information, combine it with their own underwriting policies, determine whether you will be extended a loan and, if so, what the terms will be. This means that even if you have a good FICO score and a good income, if you've only been employed for 3 months and want a $700,000 loan, the lender may consider the credit risk to be too high to extend a loan. In addition, creditors in different regions of the US may perceive your information differently.
The bottom line is that you shouldn't depend on a single creditor for your loan. Shop around and compare offers to make sure you're getting the best one.
7 Responses to “If my "FICO" credit scores from all 3 credit bureaus are good, what other credit scores do I need to know before I apply for a loan, and how do I get those scores?”
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September 20th, 2010 at 1:00 pm
I tried two different mortgage loan companies and both of them are using "Settlement One" to get my FICO score. This FICO score is about 70 points lower than the average of the 3 credit bureaus and my loan was denied. So, why should anyone bother to spend money and get ripped off by the 3 major companies to get their score if the mortgage companies are not using their information anyway. It seems like people should be made aware that the reports from the 3 major companies could be meaningless, and not to waste their money.
September 20th, 2010 at 1:49 pm
Hi Gary. I know the loan process can be aggravating. However, you should know that Settlement One does not provide FICO credit scores, they provide their own branded (and differently calculated) scores. Since this is the case, the scale for Settlement One credit scores may be different than the FICO scale, making your overall ranking the same even though the number of points are different. You should ask your lender for information about the Settlement One credit score scale.
Additionally, I would recommend applying to more than 2 banks. Not all banks use the scores you received, and in fact the FICO score is still the most popular throughout the US. And, as I mentioned in the post, your credit score isn't the only element considered by lenders. So although it is important, it is possible that other factors are playing into the decisions your lenders made.
March 10th, 2011 at 4:16 pm
[...] If you have issues in any of these categories, it is likely your credit score will be affected. However, I'd like to note that your credit score is not the only factor that creditors look at when determining whether to extend you a loan. See our past blog post to learn what other factors creditors examine prior to issuing a loan. [...]
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