If you’re planning to buy a home soon, you may already be facing higher interest rates and the challenge of saving a down payment. However, a new FICO Homeownership Survey found that credit scores and ratings still cause confusion among prospective borrowers.
According to the survey:
- 84% of respondents understood that credit scores affect mortgage eligibility.
- About 22% either underestimated or were unsure of the effect credit scores have on mortgage interest rates.
Another common misunderstanding: thinking that the credit score shown on credit-card or bank statements (often a VantageScore) will be the one used for your mortgage. Mortgage lenders still predominantly use older, mortgage-specific FICO models (Scores 2, 4, and 5 across the three bureaus). These can differ from the free scores you see online.
Other scoring products continue to evolve. VantageScore (created by the “big three” credit bureaus) is gaining traction, and newer models such as FICO Score 10T are being adopted by more lenders, but classic FICO remains the primary model for most conventional and government-backed mortgages today.
If you’d like to learn more, contact us and we’ll walk you through the exact process we use (and the scores lenders actually pull) to qualify you for a mortgage in the Prescott market.
Resources
- FICO Homeownership Survey insights
- myFICO educational resources on mortgage scores
- Contact The Kuknyo Team: prescottarearealtorteam.com