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Residential Mortgage Credit Reports

There are a lot of myths and misconceptions surrounding credit, and more specifically, the residential mortgage credit report (RMCR.)

Before you purchase or refinance a home, there are many administrative tasks that must be taken care of. Among these is pulling and reviewing your credit report to understand what you qualify for. Mortgage lenders require all three credit scores, or a "tri-merge" credit report in order to see what your mid-score or "middle" credit score is. This tri-merge RMCR includes all information that is currently reporting to the three major credit bureaus, Equifax, Experian, and TransUnion.

The credit scores you see on this type of report will differ from the scores you see on consumer-facing sites such as Credit Karma, Credit Sesame, etc. These sites are meant to be educational in nature; they give you a version of your credit score that typical lenders such as auto or retail might see when they pull your credit score to consider what you qualify for in terms of financing. The credit score models used on these consumer-facing sites are different than what your mortgage lender sees when they pull an RMCR.

What's a credit score model? You might be asking. Let's start with some names you might commonly hear: FICO® Score, Vantage Score, etc. These names are examples of credit score models used in lending. The mortgage industry uses the following FICO® Score models:

  • FICO® Experian FairIsaac Risk Model v2

  • FICO® Equifax Beacon 5

  • FICO® TransUnion Risk Score 04

For context, the most current FICO® Score Model in use today is the version 10. The mortgage industry has not yet adopted their processes and procedures to be able to use the current version, it is still maintaining the use of older models listed above.

At ARC, we understand credit scores and models can be confusing. If you want to better empower your borrower's to understand their scores and leverage their credit for their future home, reach out to us today to schedule a course for your Loan Officers.

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