How does your REAL Credit Score Stack up to the National Average?

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The average FICO score in the US is on the rise.

After bottoming out at 686 during the housing crisis nearly 10 years ago, the “average” credit score has now reached 706:

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Keeping your credit score at 700 is considered “golden” as once you’re above that level, it becomes much easier to secure favorable credit terms.

So, how does your credit score compare? Have you seen your score lately?

What’s Your REAL Credit Score?

If you’re the type who likes to monitor your credit, the number on the dashboard you see every month may not be the REAL one used by mortgage lenders and other creditors.

When you’re applying for a mortgage loan (purchase, refinance or even investment), underwriters use your FICO credit score.

That’s because the big mortgage agencies (Freddie & Fannie) rely on FICO.

Many consumer based credit services, however, use other proprietary scores which may not align with your FICO score. These proprietary systems weigh factors such as payment history, period of time over which credit is established, etc. differently than FICO does.

Why should you care?

Because even a small difference in your credit scores could mean a big difference in the amount you pay for a mortgage loan.

Small Points Make a Big Difference

Let’s say you were applying for a refinance loan, or maybe an investment property loan instead.

On a $160,000 mortgage, paying 4% over 30 years incurs $115,280 in interest. 

Just a half-percentage point higher, 4.5%, would yield $132,128 in interest over the same period — $16,848 more.

These numbers do not constitute a rate quote. Rather, they illustrate the power of interest rates as they are influenced by your overall credit profile.

What Can You Do?

There is a lot of conflicting information on the internet about what may or may not impact your credit score.

If you’re considering refinancing, buying a second home or maybe an investment property, or even upsizing/downsizing any time soon, the best piece of advice we can give you is to talk to one of our mortgage professionals first.

Our team will evaluate your situation, pull your credit through FICO if necessary, and help you get pre-approved based on FACTS, not theories.

Don’t leave your financial future to chance based on where you THINK you are. Find out for sure today.