Why Your Score May Be Different from Your Lenders

All the experts tell you to check your credit score before applying for a loan. So, you do that to help you decide whether to finally approach a lender. However, when the lender pulls your credit score, they get a much different number than the one you accessed. Which one is correct? This is an even more important question if you’re looking for a bad credit mortgage option.

One of the first things you should do is pay off as much debt as possible and save your statements showing a zero-loan balance. This helps you clear up any score discrepancies and makes it easy for the underwriter to decide in your favor. It’s also a good idea to know more about the scores lenders use.

What Credit Scores Do Lenders Use?

There are several generalized scoring products that consumers use: Credit Karma, myFico and credit bureaus to name a few. These third-party scores differ from the industry-specific scores used by lenders and creditors. For example, auto lenders use different criteria than mortgage lenders.

Lenders typically use FICO scores and VantageScore, but the version they see can be different from what you get. Sometimes, the discrepancy can disqualify you from the best interest rate or even get your application denied. Let’s look at some of the reasons these scores vary.

Credit Report Discrepancies

Last minute changes to your report can cause a discrepancy. If you pulled a credit report weeks ago from a different company than the lender uses, your scores can be very different. Most likely, the lender is using a combination of all three credit reporting agencies. However, if your application is denied or approved with unfavorable terms, the lender must send you a copy of the credit score used to make the decision.

For a bad credit mortgage, your best bet is to use the credit score you pull as a road map to clean up your credit and to approach the credit rating agency immediately to correct any mistakes.

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