Why does my credit rating from the mortgage lender look different from credit reporting agencies

I have a client buyer from Stafford, Virginia, asking me about credit scores and sources. He went and got his credit rating from a consumer agency. I know a lot of places do it: American Express, Discover Card and Credit Karma can give you updates with your credit score. What my client found was that the credit score that he got back from the mortgage lender looked a lot different compared to the credit score he got from the consumer agency. So he was like, “What the heck? I thought my credit was a lot better than what the mortgage lender said it was.”

The truth of the matter is mortgage lenders use different systems.It is not that Credit Karma or Discover Card is giving you wrong information. What they are doing is that they are only looking at part of the data. They are looking at all the usual suspects like paying bills on time and the like. But when you go for a mortgage loan, that is sort of a pretty big deal. They do a little bit more digging than, say, a Credit Karma or a Discover Card might. They look for little things that you may not even think of such as an unpaid parking ticket from Washington DC, or from Leesburg, Virginia from five years ago. These little things could come up in the mortgage lender search and it would have a negative effect on your credit score. 

Here is the moral of the story. Even if you have bought a car recently or you pay attention to your Credit Karma score, it is still really important to link up with a mortgage lender who is going to be able to point you in the right direction as it relates to your credit for a mortgage because it is going to be different. 

It is like getting your home’s valuation from an automated system like Zillow's Zestimate. It is a nice tool: it can be helpful to see if your home's value, just generally speaking, is going up or down. But, it is not a good tool to use to determine a specific valuation, at a specific point in time. So use a lot of those other services like the Credit Karma's of the world the same way you would an automated home valuation tool. These are great resources to see if your credit is going up or down. But to determine exactly what your credit score is at a particular moment in time, they’re not a the best resource. 

If you ever have questions about anything about real estate or terms you hear, never hesitate to reach out. Call me at 571-393-1082 or email [email protected]. I am always happy to help out.