In the last month, the Palm State Mortgage Company Blog has updated you about papers to expect at the beginning and at the end of your home loan process. This week, we want to back-track a little bit and discuss that often misunderstood, but valuable fact of life: Your Credit Score.
If you are a first time home-buyer, this information could be invaluable to you and if you are not a newbie to the credit scene, you might like a review. Today we will solve the four major questions that mystify consumers about their credit score.
1. First Things First: What Is the Definition of Credit Score?
Your credit score is a number that symbolizes your creditworthiness. Normally from 300-850, this magic number is produced by a mathematical formula that weighs your information against millions of credit transactions within the calculations.
To put it in financial language, your credit score is “A statistically derived numeric expression of a person’s creditworthiness that is used by lenders to access the likelihood that a person will repay his or her debts.”
2. Who Needs My Credit Scores?
Your credit score will be important, not only getting a loan to purchase a home, but in some cases, even to rent or lease a nice apartment, condominium or home. Likewise, insurance companies, mortgage lenders, 
and investors use credit score. With your credit score in hand, they can make good decisions about investing in you.
3. Yes, You Have More Than One!
There are three main companies that hold your credit data, plus lots of little ones who sell reports based on the data.
Score vendors have different purposes for your scores. Obviously, the largest companies are those that cater to auto lending or mortgage lending. Palm State Mortgage Company wants you to be aware that each home buyer’s credit report includes three scores, one from each of the three main repositories noted above.
“A FICO score is the most widely used credit scoring system. FICO is an acronym for Fair Isaac Corporation, the company that provides the credit score model to financial institutions.”
As we stated, there are other providers of credit scoring systems in addition to FICO.
3. Mortgage Lenders Typically Work With A Preferred Company’s Score!
We know that most mortgage lenders utilize “the same version from the same credit score provider largely because it has been the de facto standard for many years. That is not to say that some mortgage lenders aren’t using other versions of that score or scores from other providers.”
4. Why Are My Scores Different?
You might wonder why the score you order for monitoring purposes often differs from the score a lender gets during underwriting. You asked for it; here are the ABC’s of Credit Score Differences:
A. Credit report information is fluid because creditors regularly submit new updates on your credit information to the credit repositories.
B. As we stated above, there are several credit score providers, and they each operate with slightly differing scoring formulas.
C. “Each credit score provider has multiple versions of its score in the market at any given time.”
D. Some creditors simply do not report to credit repositories. Plus, sometimes, the creditors report inaccurately or very slowly over the course of a fiscal year.
Perhaps the biggest credit score mystery of all is easier to know than to accomplish: Keeping scores high!
If you are wondering how to keep that score high, here is the secret: Pay your bills on time and avoid accruing lots of debts.
If you are serious about owning and maintaining your own home, we recommend that you resist the lure of all the credit card companies that offer you those shiny plastic cards.
Palm State Mortgage Company encourages prospective home buyers to obtain a copy of their credit report every year.
Check it over and make certain that the data is accurate. This will be an important document when you are shopping for a house. It will help you get pre-qualified for your home loan. Once you are pre-qualified for your home loan, you can go forward in search of the home of your dreams.
