You hear about credit scores all the time. Advertisements on the internet and on your television screen seem to constantly warn you about protecting your credit and your credit scores. But if there is more than one credit agency, which score will a mortgage lender use when evaluating your loan application?
There are three main credit repositories, TransUnion, Equifax and Experian. These repositories are a database of credit histories for consumers throughout the country. There are different types of credit reporting that these agencies provide including reports for employers to evaluate an applicant, reports for insurance companies and still another set of reports for banks who are thinking of sending you a new credit card application.
Mortgage lenders use credit scores called FICO scores, the acronym for Fair, Isaacs and Company, the firm that developed the algorithm that produces the score. But if there are three agencies and there are three scores, how do lenders know which score to use?
First, lenders don't average the scores together, that's a common misunderstanding of how scores are used by mortgage companies. Instead, lenders will typically throw out the highest score as well as the lowest score and use the score in the middle.
While three mortgage scores might be similar, they're rarely the same. For example, if someone has excellent credit, the credit scores might read 785, 801 and 799. This disparity is due to the models used which include things such as when credit information was reported or certain merchants might use only one of the agencies when deciding to issue credit to a consumer. Still at other times, one agency could have a reporting error and show an artificially low number.
By using the middle score, any anomalies in credit scores can theoretically be removed and the middle score will most likely คอนโด กรุงเทพ reflect the true credit history of the mortgage loan borrower.
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