When lenders are considering your application, they will get a copy of your credit report. This report gives all the details about your financial history, payment records, total debt, and public records for liens, judgments, bankruptcies and foreclosures.
Most lenders require a residential merged credit report (RMCR) from the 3 main credit bureaus: Trans Union, Equifax, and Experian. They will order one report which is a blending of all three credit bureaus and is easier to read than the individual reports.
Credit scores usually range from 300 to 850. A mortgage lender will use the middle score for qualifying purposes. If co-borrower will be on the application with you, lender will use the lower of the two middle score.
Lender will use 705 FICO (the lower of the two middle score)
Most lenders reserve the best mortgage loans and the lowest interest rates for scores above 740. People who have scores below 660 may only qualify for high interest rate or FHA loans. The interest rates a lender charges you on a mortgage loan can be affected by even small differences in your credit score, which can add up to many thousands of dollars over the life of a mortgage loan.
Minimum Credit Score
Here are some rules of thumb most lenders follow:
• The good credit of a co-borrower does not offset the bad credit of a borrower.
• Credit items usually are reported for 7 years. Bankruptcies expire after 10 years.
• Unpaid collections, judgments and charge offs must be paid prior to closing