Credit Score Basics

Credit is one of the most important factors a mortgage lender considers.  Here you can learn how an Arizona mortgage company will view your credit.

A lender generates a credit report called a “tri-merge” report that pulls information from the three main credit bureaus:

  1. Experian
  2. Equifax
  3. TransUnion

Every home loan requires a borrower meet a certain minimum credit score.  A tri-merge credit report gives a mortgage lender one credit score for each of the three bureaus (unless a loan applicant does not have enough credit history to generate a score for each bureau).

What credit score does your lender use?

Mortgage Lenders use the middle of the 3 credit scores to determine whether or not a home loan applicant meets minimum credit score requirements. If an applicant only has two scores the lower of the two scores is used for loan approval.

For example, if a borrower has these scores – 685, 787, 721 the lender would use the 721 as the effective loan score.

More than just a number

A mortgage lender analyzes a home loan applicants credit for more than just a score. The following are all also reviewed by a lender and can significantly impact a borrower’s approval:

  • Late payments/payment performance
  • Bankruptcies
  • Judgments
  • Liens
  • Short Sales
  • Foreclosures
  • Loan Modifications
  • Collection Accounts
  • Accounts showing that an applicant has filed a dispute relative to a trade line
  • The length of time an applicant has had and established credit
  • The number of trade lines an applicant has
  • The amount of monthly debt an applicant has

Each of the items listed above plays an important role in an applicant’s ability to obtain mortgage approval.  The HOUSE Team is experienced in analyzing credit.  Our client’s know with 100% confidence that they are either approved or if they have some work to do relative to their credit.

All too often credit related issues are missed up front when a borrower applies for a mortgage. This can be very costly.  If a client pushes forward with a home purchase or a refinance based on an insufficient credit analysis they could spend money on items such as appraisals and/or home inspections.

Contact The HOUSE Team today for your free pre-approval and credit analysis.

Credit Resources

Hard Inquiry Impact
Multiple Inquiry Impact
Credit Cards & Credit Scores
Monitoring a Credit Report

Team Phone:  602.435.2149
Team Email:  Team@JeremyHouse.com