Home Loan Middle Credit Score Matters

Middle Credit Score – Phoenix

Credit is one of the most critical factors when getting approved for an Arizona mortgage.  Your Arizona mortgage lender will pull a special credit report known as a tri-merge as a part of your home loan pre-approval.  A tri-merge credit report is one where data/information is pulled from the three main credit bureaus versus just one (which is what many online/consumer generated credit reports do).  The three bureaus are used on a tri-merge report are:

1. Equifax
2. TransUnion
3. Experian

Each of these bureaus will generate a credit rating for you known as “your credit score.”  Your credit score is a representation of how much of a credit risk you represent to a lender.  The higher your score, the lower risk you represent and vice versa.  The only score that matters to your Phoenix mortgage lender is the middle score. Lenders do not average your 3 credit scores.  They simply pick the one in the middle.

For example, if you have a 680 with Equifax, a 725 with Experian and a 755 with Trans Union your lender will use your middle score of 725 with Experian to determine what programs you are eligible for and what you Arizona mortgage rate will be.  The other two scores do not factor in to either of these.

Why 3 Different Credit Scores?

Each of the three major credit bureaus has a slightly different scoring model or way of looking at your credit history.  This means that they each dissect and analyze data such as payment history, outstanding balance and existing collections in their own unique way.   The result – three independent and different scores.

On top of three bureaus having different ways of reviewing your credit history, there are also different types of credit reports.  For example, there is an automotive related credit report, a mortgage related credit report, a consumer credit report and so on.  Each of the three credit bureaus weight your credit history differently for each different type of report.  For example, an auto report may take your payment history and performance on previous auto loans into more consideration than a mortgage report may.  Different industries utilize these specialized reports to better understand how well an individual performs related to the type of credit they are applying for.  Bottom line is that there are many different variations of your credit score due to the fact that there are 3 different bureaus AND there are different types of reports that spin/weight your credit related data differently.

Credit is a very valuable and accurate way of measuring how much of a credit risk a person is however it can also be a very complicated topic.  If you have any questions please call or email me!

By Jeremy House
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Comments

  1. Dennis Ceizyk Sr says:

    SHOW ME THE SCIENCE THAT MEDIAN SCORE IS MORE RELIABLE PAYMENT PREDICTOR THAN TOP SCORE
    ” The only score that matters to your Phoenix mortgage lender is the middle score. Lenders do not average your 3 credit scores. They simply pick the one in the middle.”

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