Which credit score is most important when buying a house?

Answered by Robert Dupre

When it comes to buying a house, one of the most important factors that lenders consider is your credit score. Your credit score is a numerical representation of your creditworthiness and is based on various factors such as your payment history, outstanding debts, length of credit history, and types of credit accounts you have. But which credit score is the most significant when it comes to purchasing a house?

In the United States, there are three major credit reporting agencies: Equifax, Experian, and TransUnion. Each of these agencies calculates your credit score independently using their own proprietary algorithms. As a result, you may have slightly different credit scores from each agency. When applying for a mortgage, lenders typically pull credit reports from all three agencies and use the middle credit score as the basis for their decision.

Why is the middle credit score given the most weight? Well, mortgage companies generally ignore the highest and lowest credit scores provided by the credit reporting agencies. This is because they want to avoid any potential outliers that may not accurately reflect your creditworthiness. By focusing on the middle score, lenders aim to get a more balanced and representative view of your credit history.

For example, let’s say your credit scores from Equifax, Experian, and TransUnion are 700, 720, and 650, respectively. In this scenario, the middle credit score would be 700, and that is the number that mortgage lenders would primarily consider when determining your eligibility for a home loan.

It is worth noting that while the middle credit score is the most significant, lenders may still take the other two scores into account to some extent. They may consider factors such as the range of the scores, any significant discrepancies between them, and the reasons behind any variations. For instance, if one credit report shows a late payment that the others do not, the lender may inquire about the discrepancy and request additional documentation or explanation.

To ensure that you have the best possible credit score when applying for a mortgage, it is essential to maintain a positive credit history. This includes making all your payments on time, keeping your credit utilization low, and avoiding any negative marks such as bankruptcies or collections. Regularly reviewing your credit reports and addressing any errors or inaccuracies is also crucial.

The middle credit score is the most significant when buying a house because mortgage companies focus on this number when evaluating your creditworthiness. By disregarding the highest and lowest scores, lenders aim to get a more accurate and balanced representation of your credit history. It is crucial to maintain a positive credit history and address any errors to ensure the best possible credit score when applying for a mortgage.