If view your free annual credit report and review it, it’s good but it may be differ somewhat with the report pulled by a mortgage broker or lender.
Q: I am an avid reader of your column and have been a mortgage loan officer since 1995. Many times you have given incomplete or inaccurate information, but there was an article recently that struck a chord and I felt the need to respond.
I am concerned with the advice you provided advising consumers to pull their own credit scores from annualcreditreport.com and using that score to ask a variety of lenders to quote rates from that score.
You need to do some research to understand that the scores received from that site do not use the mortgage scoring model that lenders use. It is not uncommon when we go to pull a tri-merged credit report to have scores that are 60 to 100 points lower than what the consumer has received from annualcreditreport.com.
A: Thanks for your comment. You are correct that lenders use a different scoring mechanism for mortgage loan applications than the credit score obtained through annualcreditreport.com.
However, we don’t tell borrowers to rely on that score as a final guide to their credit score, but rather as a way to introduce themselves to a mortgage broker like yourself to get information on loans. It also helps borrowers self-select – if their score is in the low 600s, they might decide to wait, spending six months to a year improving their credit history and score.
While isn’t exactly the same score, getting your credit score from annualcreditreport.com helps lenders gauge whether the borrower has a high credit score, a less than stellar credit score, a mediocre credit score or a poor credit score.
On the basis of the score they bring to your office, you might be able to tell them that they would or wouldn’t qualify for the best mortgage rates available and you could qualify your rate quote with the assertion that you’d need to pull your own credit score to give the borrower a final determination as to what they might be able to get.
But the use of the annualcreditreport.com score is limited to those borrowers that may be starting the home buying process and that process may take weeks or months. They don’t need to have a credit report pulled on themselves early in the process only to have that pull counted against them if they don’t make an application for a loan at that time.
Borrowers are hungry for credit information. It would seem that you would or should welcome them to your office, see their financial information and hope that when they find a home, you would be there to help them through the mortgage and home buying process.
We don’t tell home buyers that the credit score at annualcreditreport.com is a definitive measure for them, and we always suggest that they find a good mortgage lender or mortgage broker to get more information.
It’s at that point that you should give them more information about the lending process, educate them about the mortgage products you have, review their specific finances, and, yes, take a look at their credit score.
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