When Your Credit Score Isn t Really Your Credit Score
Below is a MRR and PLR article in category Finance -> subcategory Credit.
When Your Credit Score Isn't Really Your Credit Score
Overview
Homebuyers are often advised to "check your credit score" before applying for a mortgage. While this is sound advice, many don't realize that not all credit scores are the same. The FICO score is what they should be focusing on.
Understanding Credit Scores
A healthy credit score is crucial, especially when applying for a home loan, as it determines if you qualify for a favorable interest rate. Most people turn to the internet to check their credit score before meeting with lenders. However, they might be surprised to learn that the score they see might differ from what the lender considers.
The Different Types of Credit Scores
There is more than one credit score. The three major credit bureaus?"Equifax, Experian, and TransUnion?"use different methods to calculate credit scores. While the criteria are similar, each bureau has a unique formula, leading to potentially different scores. What adds to the confusion is a new unified scoring system being adopted by these bureaus.
So, which score actually matters?
The Importance of the FICO Score
Most mortgage lenders rely on the FICO score, created by Fair, Isaac, and Co. This score is widely accepted among lenders, meaning you should check your FICO score for an accurate measure of your credit health.
How to Check Your FICO Score
Although there are many places online to get a credit score, not all provide the FICO score. Before paying for a score, ensure the site offers the FICO version. Equifax and MyFICO.com are reputable sites that provide this score.
Conclusion
Before applying for a home loan, ensure you are looking at the same credit score your lender will?"your FICO score. By doing so, you can have a clear understanding of your financial health and be better prepared to discuss loan options.
You can find the original non-AI version of this article here: When Your Credit Score Isn t Really Your Credit Score.
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