FICO Scores
There are different FICO score versions for different verticals: credit card, auto, mortgage, luxury items, and high-ticket items, they all use different algorithms to calculate the borrower’s score. It is imperative that a borrower looking for a mortgage monitor know their “mortgage” FICO score and not their “credit card” FICO score before applying for a home loan.
Equifax = FICO score 5
Experian = FICO score 2
TransUnion = FICO score 4
If you are seeing a FICO score model different from what is stated above, rest assured that it is NOT the mortgage FICO score that mortgage lenders use to qualify a borrower.
Knowing Your Middle FICO Score
After you find out your mortgage-specific FICO scores based on what was mentioned above, it is time to know where you stand. The three (3) different credit bureaus will give you 3 different scores. You must discard both the highest and lowest scores, respectively. What you are left with is your “middle FICO score“. That is the score that mortgage lenders use to qualify for a loan.
For example, if your Experian score is 600, Equifax is 620, and TransUnion is 640 after you discard both the highest score (640) and the lowest score (600), you are left with 620 — that is your “middle FICO” score.
FHA FICO Score Requirement
FHA Down Payment Requirement
There are two down payment requirements depending on the borrower’s credit score.
- For the 3.5% down payment, a borrower must have a middle-FICO score of 580.
- Borrowers with a FICO score of less than 580 and all the way down to 500 may still qualify for an FHA-insured loan, but they will need a minimum of 10% down payment, and certain restrictions may apply.
Minimum credit score for FHA loan
Credit Utilization
Recently Opened Accounts
Limited Credit History
Previous Derogatory Accounts
– Derogatory account means that account is considered negative. Typically, a negative account indicates serious delinquency or late payments. If you have a derogatory item in your credit report, it can have a significant negative impact on your credit score.
For more information regarding credit score requirements, contact us at (281) 801-6965 or use any of the tools on this website.