The article below is a transcript of a video originally posted to my YouTube channel on April 5th, 2021.
Hey, it’s Ray!
I wanted to talk to you guys today about something that’s really been affecting me, and that is the mortgage FICO scores.
So about a year ago my husband and I decided that we were going to really start working on our finances to get our credit scores up, so that we could apply for a new mortgage. We’re about a year and three months in and we’ve done really well so far. During the process of trying to educate ourselves and figuring out what we needed to do to get the best score possible, we learned a couple of things.
So, most of you have heard of a credit score. Turns out there’s different kinds of credit scores out there. There is the Vantage Score, which a lot of you are probably familiar with because if you sign up with a company such as Credit Sesame or Credit Karma, you’re gonna have access to your Vantage Score.
Now, if you ask me, Vantage Score is garbage. Some people aren’t going to like me saying that, but the truth is lenders use FICO Scores, they don’t use the Vantage Score. So if you’re looking at your Vantage Score, it’s good to have an idea of where you’re at. And, you can use your Vantage Score in a way so that you can work and improve your credit score over time by improving your Vantage Score. And, just the side effect of that is gonna increase your FICO scores. It’s just how it works, because if you’re working on building your credit, they use and gather the same data. They just calculate it differently and come up with different scores.
With that said, FICO scores are what you’re going to want to look at. FICO scores are largely the scores used by lenders and the most predominant FICO score (because there’s different kinds of FICO scores too. There’s even subsets. It’s kind of crazy) the most commonly used FICO score is the FICO 8 score. This is the score that most lenders use when you’re applying for credit cards and bank accounts, some auto loans, things like that. However, FICO offers multiple scores and when you’re specifically applying for a mortgage they don’t use FICO 8.
This can be a good thing and it can be a bad thing because the scores they do use differ from the FICO 8. Sometimes your FICO 8 might be lower than the mortgage scores. Sometimes your FICO 8 might be higher than the mortgage scores. it all depends on the data that the bureaus collect on you.
We’re going to be looking at FICO Score 2, FICO Score 4, and FICO Score 5. FICO 2 is run through Experian, FICO 4 is Transunion, FICO 5 is Equifax (I’m not a fan of them). So when you’re applying for a mortgage, lenders are gonna pull all three, they’re not gonna pull just one. They’re gonna pull three scores, they’re gonna pull them all. Then from there they’re gonna look and they’re gonna find the middle number—the median, okay? So if you have a FICO 2 that’s at like 670, a FICO 4 that’s at like a 730, and then a FICO 5 that’s at 700, they’re gonna look at the middle number. And, by middle number I’m not talking about the ones I just said in the order of which I said them. No, they’re gonna look at the middle number in like which number’s higher (the median). So, they’re going to take the 700 because that was in between 730 and 670. They’re gonna take the 700 and that’s the score they’re going to work off of.
And, you know that you can’t just get your mortgage FICO scores in the places that you normally get your Vantage Score. So where do you get them? It Turns out you can just go to myfico.com and in there they have three different subscriptions to choose from. They have a one tier, two tier, and three tier as of the date of this video. The second tier offers the mortgage FICO scores for the lowest price, which is right now $29.95 a month. If you just want to look at it one time, you can sign up and then cancel the subscription. If you want to just keep the monthly subscription to really work on your score, go ahead and do it. It’s actually a really cool tool, I suggest you check it out.
Likewise, if you don’t care enough to look and you’re like, “I’m just going to work on building my credit, it’s going to go up”, and it goes up, you can do that too. But, i just wanted to share with you the resources that I know of that are available out there.
That’s all I have for you guys today. I hope to share more with you, the more I learn and the more I go through this process. So, don’t forget to hit the like button If you found this video helpful at all. I’ll talk to you later.
For information on how to increase your mortgage credit scores, see my post here.