There are a lot of professionals that are misinformed of what credit score is used in a mortgage transaction.
This applies to MOST conventional/conforming mortgages. ALT-A & SubPrime have other guidelines, but may have also gone extinct.
Husband has 600 640 630
Wife has 720 710 750
Husband makes 50,000 annually, and Wife makes 70,000 annually.
Believe it or not...the LOWER of the TWO scores are used REGARDLESS of who makes more money.
In this scenario the 630 will be used in the mortgage.
Representative score is considered the middle of one borrower. If the borrower has only 2 scores then the lower of the 2 is used.
AllRegs is used by many mortgage lenders.
X, 802.02: "Representative" Credit Score
Credit scores are based on a single credit file for the borrower that is obtained from one of the three major credit repositories-Equifax, Experían, or TransUnion. Because the models used by each repository differ slightly and the amount of information in an "in-file" report may differ among the repositories for any given borrower, it is possible for a borrower to receive a different credit score from each repository. Therefore, we recommend that a lender obtain a minimum of two credit scores for every borrower. This enables the lender to select a single applicable score for underwriting each borrower-the lower score when two credit scores are obtained or the middle score when three credit scores are obtained.
When there is only one borrower, the single applicable score used to underwrite that borrower is the "representative" credit score for the mortgage. If more than one individual is applying for the same mortgage, the lender should determine the single applicable credit score for each individual borrower and then select the lowest applicable score from the group as the "representative" credit score for the mortgage. The "representative" credit score for the mortgage should be used to underwrite and evaluate the comprehensive risk for the mortgage application.
Hey Robert,
Good post, but you may want to add that this does not apply to sub-prime. This gets confusing to those that only do sub-prime and are not familiar with Fannie or Freddie etc. I'm not trying to "sharp shoot" you. : )
Thanks....no problem...I changed it.
Didnt put it the first time because it feels like subprime/alt-a products are extinct.
Hey Robert,
No problem... ALT A and subprime is still out there, but those that can qualify now (current subprime standards - other than income documentation) can go fannie, freddie or government - but that's something that has never really changed. It has always been a pet-peeve of mine when sub-prime lenders put A paper clients into a sub-prime mortgage. Thanks!