Mortgage Resource Plus, Inc. - Mrtg vs Consumer Scores

It's good practice to check your credit report and credit score to see where you stand before applying for a loan. However, the credit score you see is unlikely to be the same one the lender uses when making a decision on your creditworthiness. Both scores likely are accurate, but lenders use specialized scores calculated differently depending on the type of loan. Mortgage lenders use a different credit scoring model than consumers have access to. Over 90% of mortgage lenders use FICO, a score created by Fair Isaac and Company from all three credit bureaus – Trans Union, Equifax, and Experian. Most consumer credit scores use the Vantage 3.0 or 4.0 scoring models.

Mortgage credit scores put a lot of emphasis on payment history and credit utilization with other factors playing a role too.

35% payment history – Your payment history tracks how well you make your payments. Any payment made 30 days or more past the due date hurts your credit score, whereas a timely payment history can greatly improve your credit score.
30% credit utilization – Your credit utilization is a comparison of your total outstanding debt compared to your credit lines. For example, if you have a $1,000 credit line and you have $500 outstanding, you have a 50% credit utilization rate. Ideally, you should keep your credit utilization rate lower than 30% for the best results.
15% credit length – The age of your credit affects your credit score too. The ‘older’ your credit is, the better it is for your credit score. Don’t close old accounts unless it’s absolutely necessary as this is an easy way to increase your credit score.
10% credit mix – Lenders like to see that you can handle a variety of debt including credit cards (revolving debt) and installment debt (mortgage loans, personal loans, car loans, etc.)
10% inquiries – Each time you apply for new credit or take out new credit, it slightly influences your credit score.

Other situations that may affect your credit include:

Bankruptcies: Declaring bankruptcy significantly lowers your credit score and remains on your credit report for 7 to 10 years.
Utility bills and other fixed expenses: These don’t typically contribute to your payment history. However, payments that are at least 30 days late may be reported to credit bureaus and impact your score.
Tax liens and judgments: Though these used to impact your credit score, they no longer do.
Wage garnishment: This does not impact your score directly. However, wage garnishment typically results from negative credit behavior, such as defaulting on a loan, which might lower your credit score.