Mortgage Credit Scores

Mortgage Credit Scores Used By Lenders To Qualify Borrowers

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will be covering mortgage credit scores used by lenders to qualify borrowers. We all know the importance of credit scores when it comes to the mortgage application process. Borrowers get confused and do not know why lenders require credit scores and credit reports from the three major credit reporting agencies. What are credit scores and which credit score do mortgage companies use in qualifying a borrower for a home loan is the topic we will cover in this blog. In the following paragraphs, we will be going into detail on the mortgage credit scores used by mortgage lenders to qualify borrowers.

What Mortgage Credit Scores Are Used By Lenders To Determine The Qualifying FICO SCORE

When borrowers complete a mortgage application, lenders will pull their credit reports from the three major credit reporting agencies. The lender gets three credit scores from each of the credit reporting agencies. Credit scores used by lenders differ from regular consumer credit scores. Mortgage scores are mainly used for qualifying borrowers for home loans.

The three credit scores are for each loan borrower. If a borrower has a co-applicant, there will be a total of 6 credit scores. 3 credit scores for each borrower. The qualifying credit score used in cases of borrowers with co-borrowers is the middle credit score of the lower credit score borrower.

What Credit Bureaus is Most Used By Mortgage Lenders?

Lenders will pull a tri-merger credit report on mortgage applicants. Each credit bureau has a separate credit score for each consumer. Lenders will use the middle credit score to qualify borrowers. Here are the three credit reporting agencies:

Each credit reporting agency will have different credit scores for each borrower. Lenders always use the middle credit scores in qualifying mortgage applicants.

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What Credit Score Is Used To Buy a House?

For example, here is a case scenario:

  • Let’s use a case scenario where James Jones had a Transunion credit score of 710
  • an Experian credit score of 650
  • and an Equifax credit score of 595
  • Lenders will use the middle credit score
  • Experian score of 650 FICO is the middle credit score for James Jones

This is the credit score that will be used. However, both the borrower and/or co-borrowers can work on increasing their credit scores during the mortgage process. The actual credit score used is important just prior to locking the mortgage rate. Credit scores are what determine the mortgage rate. There are quick fixes to increasing credit scores. One of the easiest and quickest ways of boosting credit scores is to pay down credit card balances to under a 10% credit utilization ratio.

Qualifying For a Home Loan With Non-Occupant Co-Borrowers

Co-Borrowers On Mortgage Loan

Now, the co-borrower, Jill Jones has Transunion credit scores of 680:

  • Experian credit scores of 620, and Equifax credit scores of 565
  • Jill Jones’s middle credit scores are 620
  • James Jones’s middle credit scores are 650
  • Co-borrower Jill Jones’s middle scores are 620
  • Now what?
  • Which mortgage credit scores will the lender use in calculating credit scores in this particular mortgage loan?
  • The answer to this question is the lender will always use the lower of the two borrower’s credit scores
  • So in this case, the lender will be using the lower credit scores of Jill Jones, which is 620 FICO

So out of a total of six credit scores, we now came to one credit score in qualifying for a mortgage loan.

Averaging Credit Score With Co-Borrowers on Conventional Loans

Breaking news and great news for borrowers with multiple borrowers on conventional loans. Effective immediately, borrowers of conventional loans with co-borrowers and/or non-occupant co-borrowers can have the middle credit scores of all borrowers averaged. What this means is if the main borrower has a middle credit score of 600 and the co-borrower has a middle score of 700, the average of these two credit scores will be used as the qualifying credit score.

Therefore, the average middle credit score is 650 FICO. The 650 credit score will be the qualifying credit score used. Prior to this update, the main borrower would not have been able to qualify for conventional loans with a 600 FICO. Now both borrowers can qualify for a conventional loan since the middle credit scores are averaged. However, the rate will be determined by the lower borrower’s middle credit score.

NON-QM Mortgage Loans

Gustan Cho Associates offers non-QM loans and bank statement loans for self-employed borrowers. NON-QM Loans have different lending guidelines than government and/or conforming loans. Non-QM loans are portfolio loans and are often referred to as non-conforming loans. Every non-QM wholesale lender has its own lending guidelines. Non-QM wholesale lenders can make exceptions to their lending guidelines in a case-by-case scenario.

Lender With Hundreds of Mortgage Options

Gustan Cho Associates has a national reputation of being a one-stop mortgage lender due to not only having no lender overlays on government and/or conventional loans but offering dozens of non-QM and alternative loan programs. Any non-QM loan program that is available in the market, we at Gustan Cho Associates have available.

We have dozens of non-QM wholesale lending partners in our network.  Gustan Cho Associates will use the middle credit score of the main borrower and NOT the lower middle credit score of the lower credit score borrowers/co-borrowers. There are quick fixes to boost credit scores. Borrowers with lower credit who need help to qualify for a mortgage with bad credit, please contact us at Gustan Cho Associates at 800-900-8569. Or text us for a faster response or email us at

This blog on Mortgage Credit Scores Used By Lenders To Qualify Borrowers Was UPDATED On August 11th, 2022

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