Common Credit Score Questions When Getting A Mortgage In 2020
While some radio commercials lead borrowers to believe that “your job is your credit”, when it comes to a mortgage, the borrower’s credit score can be the make or break factor in qualifying for the loan. It can also dramatically affect the interest rate, as well as, the variety of mortgage programs that are available to a borrower. So it makes sense that this is a common topic where borrowers need info.
Here are some of the most frequently asked questions about credit scores that we’ve heard:
Lenders will use the lowest mid credit score of all borrowers. The “mid credit score” is the middle score returned by the three credit score bureaus: Equifax, Experian and TransUnion.
There are a lot of other factors that contribute to your credit score, but paying off loans should not materially lower your FICO score long term. However, there can be a temporary dip in your FICO score.
Many loans don’t require a minimum number of credit lines (aka “tradelines”). Your mortgage broker should tell you if the loan you are considering does have a tradeline requirement. Even if there is a requirement, there are many ways to quickly build tradelines depending on when you’re planning to secure financing. For example: your spouse can apply for a couple of credit cards or you can also add them as an authorized user to some of your accounts, which might help improve their credit profile as well.
If you want to take your relative off of the mortgage, you would just need to refinance. Provided your credit and income qualifies, it should be a straightforward process for you to remain on.
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