Credit scores and Misinformation! – Stress Free Mortgage

There is a lot of information about credit, credit scores and how it works with a mortgage. Reading the recent headlines about how lower credit scores are rewarded and higher credit scores are not, is one issue. Separately, there are common misconceptions about the credit scores you get from banks.
Conventional loans have always had costs that effectively raise the interest rate. They are based on credit scores, loan to value (equity) and the type of loan and property. They are always being adjusted based on risk throughout the years, but this time, they were not adjusted based on risk.
The higher credit scores that were not previously charged a cost, are now being assessed a cost. And the lower credit scores that were charged a much higher cost, are being charged less than before. However, the lower credit scores are STILL being charged more than the higher credit scores. So the fallacy of “I may as well have a lower score” is not true. You will still pay much more with a lower score.
The other misinformation is about the “credit score” you get from a bank, Equifax/Experian, credit Karma, etc. Those are a great source of information about what can be in your credit profile, such as late payments, collections or anything delinquent. However, the “score” they give you is not a mortgage credit score, which is what is used for a purchase or refinance loan. There is a filter that is used for a mortgage credit score that is not accessible to these banks and so their score is not correct. I have had clients where the bank score said 629 and the mortgage score was 582 and I had another one where their bank score said 660 and the mortgage score was 720.
Rely on a mortgage professional to help decipher your credit and help you manage it through the loan process.

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