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Why Mortgage Credit Scores Are Little Known and Often Low

Posted by Ryan D. Peterson | Apr 01, 2021 | 0 Comments

Family sitting together on sofa discussing the difference between their credit score and a mortgage score.

Many consumers don't even know they have one until they try to qualify for a home loan

By Penelope Wang

When Raquel Moore of Atlanta began shopping for her first home last summer, she thought her credit score was 760 based on the number shown by her credit monitoring service. That placed her in the very good range, which qualified her for an affordable interest rate.

But during the preapproval process, Moore's bank said that her mortgage credit score—a number she didn't even know existed—was just 700. It placed her in the good credit range but not high enough for the rate she wanted.

“I was never aware of the huge discrepancy between my mortgage score and other credit scores until I was trying to buy a home,” says Moore, 38, a self-employed contractor. “It was really disheartening.”

Many home buyers are just as surprised to find out they have a mortgage credit score—and that it's often much lower than their primary credit score.

In fact, consumers have dozens of credit scores, many of which they don't know about and may never see. Because a house is usually a family's biggest financial commitment, the mortgage score is one of the most important. It helps determine whether you qualify for a home loan and what rate you pay.

“The problem is consumers often don't even know that mortgage scores exist and that there may be a big disparity compared with the credit score they commonly see,” says Syed Ejaz, a policy analyst at Consumer Reports.

Adding to the confusion, it's difficult for consumers to access their mortgage credit scores compared with their basic scores, such as the FICO 8 and VantageScore 3. Those scores, which are often used for credit card applications and general credit checks, are widely available for free on bank websites and credit information apps.

Consumers do have options for tracking down and improving their mortgage credit scores, which we explain below. But first, it's important to understand why there's a gap between your regular credit score and the one for a mortgage.

 Woman checking her credit card balance and credit score

Why the Difference?

Unlike most of your credit scores, the mortgage score is based on a formula that hasn't changed much in two decades. That's because Fannie Mae and Freddie Mac, which purchase most U.S. single-family mortgages, require those loans to be underwritten based on that FICO formula. 

Over the past decade, there have been efforts to revamp the mortgage credit score, but the process has been slowed by Washington bureaucracy.

The problem with the old formula is that it doesn't reflect some of the more consumer-friendly changes that have been introduced in the new formulas for other credit scores. As a result, the old formula may give some borrowers lower scores, says John Ulzheimer, a credit expert.

For example, medical debt is counted less heavily under newer FICO scores, compared with the mortgage formula. Similarly, debt collections that have been paid off, which are not counted in newer scoring models, can still weigh against consumers under the classic FICO formula, says Chi Chi Wu, a staff attorney at the National Consumer Law Center, a nonprofit group.

Mortgage credit scores can also be more difficult to improve. New programs such as Experian Boost and eCredable Lift allow consumers to add payments for utilities and rent to their credit reports, which can help their scores if they have thin or poor credit histories. But these payments are not counted under the old mortgage formula.

As a result, it's not surprising to see differences of 20 points between the FICO score used by mortgage lenders and other credit scores, according to Joanne Gaskin, vice president, score and analytics, at FICO.

You also may have less time to shop for a mortgage without hurting your credit. Newer credit formulas give consumers a 45-day shopping window, when multiple credit requests by lenders will count as a single inquiry. That's important because having too many requests for your credit score can actually lower the score; a high number of inquiries may indicate you are a riskier customer.

But that window is just 14 days for the mortgage score issued by Experian, one of the three major credit bureaus that generate credit scores. That means you may have to shop fast. 

“It's kind of sad that the best advice says consumers should shop around to get the best deal, but that shopping could cause you to ding your credit score,” says Lisa Rice, president and CEO of the National Fair Housing Alliance, a nonprofit group.

Access to credit for home buying has been a longstanding challenge for people in low-income communities, especially consumers of color, says Rice, who sees an urgent need to update the mortgage credit score.

Last summer the Federal Housing Finance Administration (FHFA), which oversees Fannie Mae and Freddie Mac, announced that it would consider alternative credit scoring formulas. But that process could take several years, says Gaskin.

Until a new formula is approved by FHFA, however, the old formula remains in use.

Improving Your Mortgage Score

Despite having a lower-than-expected mortgage score, Atlanta resident Moore managed to improve it and buy a home.

First, she paid down an outstanding debt to help raise her score. Then she did intensive shopping for a loan, talking to several banks and credit unions before finally securing a mortgage that was aimed at first-time home buyers.

“I found that if you get approved by a bank, you may be able to get a lower rate or better offer from another bank,” says Moore, who closed on her house in December.

To help improve your mortgage score, here are four guidelines. 

1. Check Your Mortgage Score First

Before you start touring open houses, make sure to look up your mortgage score.

“It's important to do this before you fall in love with a house and make an offer,” says Lucy Randall, director of sales at, an online mortgage provider.

You have to pay a fee, though, to get your mortgage credit scores as well as regular updates. At, for example, you can see up to 28 different FICO scores, including mortgage scores, for $19.95 a month and up.

Another option is to go to a lender for a mortgage preapproval. That lender can do an informal credit check from a single bureau that won't affect your credit score, says Randall.

If you are working with a housing counselor approved by the Department of Housing and Urban Development (HUD), that counselor can help you gain access to your mortgage score, says Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling (NFCC).

You can find a HUD-approved housing counselor at the agency's website. Or you can find one through the NFCC who may also offer credit and debt counseling, says McClary.  

2. Don't Be Discouraged

If your mortgage credit score isn't as high as you'd like, take a long view. It may require months or even years to improve it.

But over time, you can bring those numbers up with many of the same strategies that can improve your primary credit score. Those steps include paying your bills on time, minimizing your use of credit, and refraining from opening new accounts, which could lead to credit inquiries. (You can find more tips in “Secrets of Credit Score Success.”)

You may also be able to take advantage of programs designed to help home buyers with less-than-stellar scores. Consider reaching out to a HUD-approved housing counselor for help, as noted above. Or contact your local community bank or credit union, which may offer more flexibility than a large bank or mortgage lender. 

3. Review Your Credit Report Regularly

To make sure you get the best possible credit score, review your credit report to identify any errors or incomplete information. You are legally entitled to receive one free credit report from a different credit bureau each year.

If you space out requests every four months you can get regular updates throughout the year. And because of the pandemic, you can request weekly reports from all three of the major agencies until April 20, 2022.

It's best to go to when requesting your report rather than the credit bureau websites, says CR's Ejaz. That way, you won't be steered toward a costly credit-monitoring service. And you won't be required to agree to forced arbitration, which could limit your ability to take legal action in the event of problems or errors in your files.

If you discover any errors on your report, file a dispute. Fixing these mistakes can be a lengthy process, so get started well before you begin your mortgage hunt.  

4. Bunch Up Your Loan Inquiries

When you do apply for a home loan, the lender will pull your mortgage score from all three bureaus, which are included in a single document called a tri-merge credit report, says Ron Haynie, senior vice president of mortgage finance policy at the Independent Community Bankers of America, a trade group.

Because the Experian FICO 2 window for mortgage shopping is relatively tight, just 14 days, you'll want to keep your loan inquiries within that time frame to minimize any dings on your report if possible, says Ulzheimer.

About the Author

Ryan D. Peterson

Attorney Ryan D. Peterson Ryan D. Peterson is a former debt collection attorney turned consumer rights expert and advocate. After graduating from William Mitchell law school in 2008, Ryan opened his own criminal defense firm. In 2010 Ryan joined a Minneapolis-based debt collection firm. Ther...


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