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Credit Scores for Mortgage Explained (FICO, VantageScore) How FICO and VantageScore models work and which scores lenders actually use. Minimum Credit Score Requirements by Loan Type Score thresholds for conventional, FHA, VA, and USDA loans. Credit Repair Strategies Before Applying for a Mortgage Actionable strategies to improve your credit before you apply.

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Bankruptcy and Mortgage Waiting Periods Bankruptcy imposes specific waiting periods before a borrower can qualify for a new mortgage, with timelines varying by bankruptcy chapter (7 or 13) and loan program (conventional, FHA, VA, USDA). Chapter 13 generally has shorter waiting periods than Chapter 7 because it involves active debt repayment, and extenuating circumstances may reduce waiting periods further. Collections, Judgments, and Liens on Mortgage Applications Collections, judgments, and liens are derogatory items on a credit report that indicate debts were not resolved through normal payment channels. Each is treated differently in mortgage underwriting: collections may be acceptable under certain conditions, while judgments and liens are title issues that must be resolved before closing regardless of the borrower's credit score. Credit Disputes During Mortgage Underwriting Credit disputes during mortgage underwriting refer to active dispute notations on a borrower's credit report that may cause the FICO scoring model to exclude the disputed account from the score calculation, potentially inflating the borrower's score. Agency guidelines require borrowers to remove dispute notations on accounts meeting certain balance thresholds and re-pull credit with updated scores before the loan can close. Credit Repair Strategies Before Applying for a Mortgage Credit repair before a mortgage application involves strategic, timed actions to improve a borrower's FICO score and overall credit profile in the three to twelve months preceding the application. Priority actions include reducing credit utilization, disputing errors, leveraging authorized user accounts, and managing collections, while avoiding actions that can inadvertently lower the score or complicate underwriting. Credit Scores for Mortgage Explained (FICO, VantageScore) Mortgage credit scores are specific FICO model versions (FICO 2, 4, and 5) that lenders are required to use when evaluating borrowers. These legacy scoring models differ from the FICO 8, FICO 9, and VantageScore versions available through consumer monitoring tools, which is why a borrower's mortgage score may not match the number they see on free credit apps. Credit Utilization and Its Impact on Mortgage Approval Credit utilization ratio measures revolving credit balances relative to credit limits and is the second largest factor in FICO scoring. Mortgage lenders see utilization as a snapshot at the time of credit pull, making the timing of balance payments relative to statement closing dates a critical consideration for borrowers preparing to apply. How Credit Inquiries Affect Your Mortgage Application Credit inquiries in the mortgage context include hard pulls (which are recorded on the report and can affect the FICO score) and soft pulls (which have no score impact). FICO scoring models include a rate shopping deduplication window that treats multiple mortgage inquiries within a concentrated period as a single inquiry, allowing borrowers to compare lenders without compounding score damage. Late Payments and Mortgage Qualification Payment history accounts for 35% of a FICO score and is the most heavily weighted factor in mortgage underwriting. Late payments are reported in 30-day increments, with severity increasing at each stage, and their impact on mortgage qualification depends on recency, frequency, severity, and whether the delinquent account was a mortgage or other consumer obligation. Minimum Credit Score Requirements by Loan Type Minimum credit score requirements for mortgages vary by loan program and are set at both the agency level (Fannie Mae, FHA, VA, USDA) and the individual lender level through overlays. Conventional loans generally require 620, FHA requires 580 for 3.5% down or 500 for 10% down, VA has no official minimum but lenders typically require 620, and USDA targets 640 for automated approval. Mortgage After Foreclosure or Short Sale Borrowers who have experienced a foreclosure, short sale, or deed-in-lieu of foreclosure must observe mandatory waiting periods before qualifying for a new mortgage. Waiting periods range from two to seven years depending on the loan program and the nature of the event, with reduced timelines available when documented extenuating circumstances contributed to the default. Rapid Rescore for Mortgage: How It Works A rapid rescore is a lender-initiated process that expedites updates to a borrower's credit report and score, typically completing within three to five business days. It is used during the mortgage application process to reflect account changes such as paid-down balances or corrected errors that have already occurred but have not yet appeared in the standard credit reporting cycle. What Lenders See on Your Credit Report A mortgage credit report (tri-merge or RMCR) is a comprehensive document that combines data from all three credit bureaus and provides underwriters with a detailed view of every tradeline, payment history, public record, collection, inquiry, and personal information item in the borrower's credit file. Underwriters review this report line by line, looking well beyond the credit score itself.

Frequently Asked Questions

What credit score do I need for a mortgage?

Minimum scores vary by loan type. Conventional loans typically require 620, FHA allows 580 with 3.5% down (or 500 with 10% down), and VA has no official minimum but most lenders require 620. Higher scores qualify for better rates.

Which credit score do mortgage lenders use?

Most mortgage lenders use FICO scores pulled from all three bureaus (Equifax, Experian, TransUnion) and use the middle score. For joint applications, lenders typically use the lower middle score of the two borrowers.

Will shopping for a mortgage hurt my credit score?

Multiple mortgage inquiries within a 14- to 45-day window (depending on the scoring model) are treated as a single inquiry. Rate shopping within this period has minimal impact on your score.

How long after bankruptcy can I get a mortgage?

Waiting periods depend on the bankruptcy type and loan program. Chapter 7 typically requires a 2-4 year wait; Chapter 13 may allow applications 1-2 years after filing with court approval.

Can I get a mortgage with collections on my credit report?

Yes, in many cases. FHA does not require medical collections to be paid. Conventional loans may require collections above certain thresholds to be paid or explained. Each situation is evaluated individually.

How can I improve my credit score before applying?

Key strategies include paying down revolving credit card balances below 30% utilization, avoiding new credit applications, correcting errors on your credit report, and maintaining on-time payments for at least 12 months.

What is a rapid rescore?

Rapid rescore is a service offered through mortgage lenders that updates your credit score within days by submitting proof of account changes directly to the credit bureaus. It is not available to consumers directly.