Are credit scores provided to consumers calculated the same as credit scores provided to mortgage lenders?

August 13, 2009
By: Curtis Arnold

Question:

I hope you are doing well. I think the information on your site is so helpful, and I have consulted it and recommended it numerous times.

I have a question that needs your expertise. My boyfriend is in the process of buying a home. He went online and got his credit scores from the three main credit reporting agencies the same day that a mortgage lender pulled his credit report. The credit scores he received were significantly higher than what the lender pulled; enough to affect the interest rate they were willing to offer. When he questioned the loan officer about the differences in the scores, she forwarded his question on to someone else at the bank. Ultimately, this is the response he got:

"A report he would have pulled would be a "consumer monitoring" report only. The score is calculated differently because when he pulls it, he is not actually applying for any credit, just monitoring his own. When the credit is pulled by a credit grantor/lender it is calculated differently. I am not sure why they do not inform consumers of this on the website where they can pull their own credit, but it is not likely that the scores will ever be the same from a consumer monitoring report to a credit applicant report."

Is this true, or should he consider looking at a different lender? This lender was recommended by his realtor.

Answer:

The lender's statement, while confusing, is generally true. Your FICO score (actually there are 3) is typically going to be the closest thing to what your mortgage lender is seeing. You can find more information by visiting MyFICO.com. We also have free credit score offers.

If you need some guidance on what is considered a good credit score, please consult our recent featured article on this topic Risk, Not Law, Cause for Rising Credit Card Rate."

Have you shopped around much? ShopRate.com is a good place to shop for the best mortgage rates. Also, remember that fees/points are negotiable!

Important Note! The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we can not guarantee the accuracy of the information in this article. Please verify all terms and conditions of any credit card prior to applying.

About the Author

Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about credit cards since 1998. New! Curtis is the author of "How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line" (FT Press, 2008). He is also the co-author of the upcoming Complete Idiot's Guide to Person-to-Person Lending (Alpha Books/Pengiun Group USA, April 2009), a contribitor to The Ultimate Allowance (InnerWealth Publishing, 2008) and is extensively featured in 42 Rules^TM for Driving Success With Books (Super Star Press, January 2009).