Advice From a Mortgage Pro: Not All Your Credit Scores Are Equal

Sponsored By CrossCountry Mortgage

New York City’s leading mortgage originator Barry Koven of CrossCountry Mortgage offers mortgage financing, including renovation loans, for co-ops, condos and houses in New York City.

Created By Brownstoner

In this series of articles, mortgage pro Barry Koven, originating branch manager at CrossCountry Mortgage in Brooklyn, explains some basic facts about mortgages and demystifies the process of getting one.

One thing to understand is credit scores and how they affect your ability to get a mortgage and your interest rate.

Credit scores can range from 300 to 850, with 620 to 699 being fair, 700 to 740 being good and over 740 being excellent.

There are three credit reporting agencies: Equifax, TransUnion and Experian. For a mortgage, we use a tri-merge report, which includes all three scores and uses the middle score for the mortgage.

Depending on what type of credit you are applying for, not all scoring is alike. This means your mortgage score can be different, and possibly lower, than a score you may see on another credit score reporting website, as there are different algorithms used depending on the type and amount of credit you are applying for.

As an example, a store credit card may have different algorithms and lower criteria for a $500 line of credit, so it could show a higher credit score than a mortgage score for a much higher amount of credit.

Here are the five factors, ranked, that make up your credit score for a mortgage:

1. 35 percent: Payment history. This is established from your payment history, collections and public records.
2. 30 percent: Amount owed. Based on your credit utilization, this considers the amount that you owe compared to how much credit you have available.
3. 15 percent: Length of credit history. We suggest not closing your oldest accounts.
4. 10 percent: New credit inquiries. Applying for new credit or opening several credit accounts in a short amount of time can represent a greater risk, especially for people without a long credit history. That being said, credit agency software should be able to detect multiple inquiries from the same credit type within a short period of time without a negative impact, such as when you are shopping for a mortgage.
5. 10 percent: Types of credit. Your credit score considers your mix of credit cards, retail accounts, installment loans, mortgages, etc.

Some ways you can improve your score include:

• Pay bills on time.
• Have minimal lines of credit.
• Don’t max out your cards; stay at a lower percentage of the total limit on the cards.
• Hang on to an older credit line.

Contact originating branch manager Barry Koven (NMLS #404510) via phone at 917.597.1330, email at barry.koven@myccmortgage.com or website at crosscountrymortgage.com/Barry-Koven.

[Photos via Unsplash except when noted otherwise]

Equal Housing Opportunity. All loans subject to underwriting approval. Certain restrictions apply. Call for details. All borrowers must meet minimum credit score, loan-to-value, debt-to-income, and other requirements to qualify for any mortgage program. CrossCountry Mortgage, LLC NMLS3029 (www.nmlsconsumeraccess.org). Licensed by the New Jersey Department of Banking and Insurance. Licensed Mortgage Banker – New York State Banking Department.