If you have recently been on a personal finance site to check your credit score and then applied for a mortgage you may have been surprised at the difference in your credit score. That’s because more often than not, the score you received from the personal finance site is going to be higher than the credit score your lender receives when they pull your credit.
Personal finance sites that can access your credit history use a different algorithm to calculate your score. They are giving you more of a generic credit score that covers a wide range of credit products. Whereas your lender’s algorithm is developed specifically for mortgage loans. The same holds true for when you apply for a credit card or auto loan. Each industry will have a unique way of placing value or weighing the importance of data in your credit history.
Even though scoring algorithms vary, the free personal finance sites can provide you with a good window into your credit report and score in general. From there you can get an idea of where you stand and can check for any discrepancies on your report such as late payments or accounts that may not be yours. Credit scores typically range from 300 to 900. The recommended score for mortgages is 620 or above. If you find yourself toward the lower end of this range, don’t despair. With time and diligent financial care you can raise your score. For credits tips to improve your score visit “10 Tips to Improve Your Credit” on amerisbank.com.
All loans subject to credit approval.