House on suburban street with 'For Sale' sign in foreground

Applying for a Mortgage? Check Your Credit Score First

Your credit score plays an important role in determining whether you will qualify for a mortgage and, if so, at what interest rate. On a $200,000 mortgage, for example, someone with a good score (760 or higher) will pay nearly $200 less per month than a person with a bad score (639 or lower).  You can run some different scenarios on the web site of Fair Isaac Corporation (FICO), the company that created the credit score.

Before applying for a mortgage, it’s a good idea to check your credit score. While credit reports from each of the three main credit bureaus are free (check them once a year at, your credit scores are not.

Where to Get Your Credit Score

You’ve probably seen offers for a free credit score.  Usually, they require that you sign up for credit monitoring at a monthly cost.  Take a pass on that and buy your FICO credit score from Fair Isaac for $19.95.

If you are just curious to know your credit score, buying it from one credit bureau is fine. However, if you’re planning to buy a home, spring for both of the FICO scores that are available to you, the one from TransUnion and the one from Equifax.

Your two scores should be similar to each other, within about fifty points. If they differ more than that, something may have been misreported to one of the bureaus, so go over your credit reports with a fine-tooth comb.  Look especially for any notations of late payments.  If you believe you’ve always paid on time, contact that particular creditor and ask them to make a correction.

Applying for a Mortgage as Husband and Wife

If you and your spouse are applying for a mortgage jointly, both of your credit scores will be taken into account. I should say all six of your credit scores, because each of you has three scores, one from each of the three bureaus. Lenders typically base their decision of whether to offer you a loan, and at what rate, on the lower of both of your middle scores.

If you are applying for a mortgage that will require only one income, which I highly recommend, and the person whose income you will use has a credit score in the mid-700s or higher, you don’t need to worry about the other person’s score, at least not for the purpose of applying for your mortgage. It’s fine to apply for the mortgage in only one person’s name.

However, as long as both of you have strong credit scores, you may still want to apply in both of your names. That way, the mortgage will show up on both of your credit reports, and that may further strengthen your scores.

Improve Your Credit Score Quickly

If you have reason to believe that you could improve your credit score quickly enough to impact your mortgage rate, either by paying down a debt or fixing a mistake on your credit report, and if you can’t wait thirty days to see if your score will, in fact, improve after taking that action, see if your mortgage broker works with a rapid rescoring service.

For a fee, such services may be able to get the credit bureaus to update your credit report within days. But they can help only if you find a legitimate problem and the creditor involved has acknowledged they made a mistake or if you have taken meaningful action, such as paying down a large portion of your debt.

By the way, an excellent book about choosing a mortgage is Mind Your Mortgage by Robert Bernabé.

What other questions do you have about the impact that your credit score may have on your mortgage?

Do you know someone else who may benefit from this article?  Please forward a link.  And if you haven’t done so already, you can sign up for a subscription to this blog by clicking here.  Two or three times a week, you’ll receive ideas and encouragement for using money well.


5 Responses to Applying for a Mortgage? Check Your Credit Score First

  1. Nicole June 14, 2011 at 1:50 PM #


  2. Matt Bell June 14, 2011 at 1:19 PM #

    Nicole –

    I checked with Craig Watts, Public Affairs Director at Fair Isaac. To see how much a 30-day delinquency might affect a typical consumer’s FICO Score, he recommended looking at this page:

    He also said that the FICO Score determines how much weight to give delinquencies by assessing three dimensions: recency, severity (for how long has the account been delinquent), and frequency (how many times has the person been reported late on this and other accounts). Several 30 day delinquencies would influence the “frequency” assessment. If the 30 day delinquencies were consecutive – the account went late just once but for 90 days, for example – the “severity” assessment would be affected.

    So, it’s hard to give you a precise answer as to how much this will impact your husband’s score. But it will have an impact.

    The best way to turn things around, of course, will be if your husband’s friend builds a steady history of paying on time.

  3. Nicole June 14, 2011 at 11:09 AM #

    How much does a co-signed loan affect credit? My husband co-signed a student loan for a good friend, and the friend has had several 30 day lates on the account. How much will that affect his score?

  4. Matt Bell June 13, 2011 at 12:00 PM #

    Thanks for these clarifications, Joshua. This is really helpful.

  5. Joshua Christensen June 13, 2011 at 11:41 AM #

    Hey there Matt,
    This is a great, to the point article. A couple of things to point out and perhaps clarify for your readers.

    In the first paragraph you discuss the difference between a 760 and 639 or below FICO score and the impact that may have on an interest rate. That is extremely true on a conventional loan. FHA & VA loans do not penalize for above 640, and minimally below 640.

    Also, When ordering the credit reports from any of the online bureau agencies, don’t be surprised to see that your scores don’t match the mortgage company scores exactly. When a consumer orders their own report & score it is a general score. The mortgage companies, auto dealers, and insurance companies run credit and have scoring models specifically designed for their industries. The main point is that there will be some differences to be aware of when pulling your own credit reports.

    I do agree that it is a good idea to review your credit before making major purchases to address any obvious corrections you feel you need to make.

    Thanks for the great information Matt!

Share This