For anyone in the market for a new house, an addition, or a new car, a low credit score can cost you thousands if you borrow.
“Consumers have paid billions of dollars in extra fees because of their credit score,” explained mortgage broker and credit score expert Al Bingham.
Matsunaga got his score from the three bureaus and they were all in the mid-600’s.
He figured he was ready to start house-hunting, but his plans hit a snag when his mortgage company ran his credit score.
“I was absolutely dumbfounded that there was a 30 point difference,” he said.
Bingham says the three credit bureaus use their own formula to calculate their scores.
They often don’t match the numbers most lenders use.
“In most cases it is lower, which means the consumer has to pay a higher interest rate and more fees,” he said.
Even a small difference in your score can make a huge difference when crunching the numbers on a mortgage.
“One point, a 679 to a 680 for a $200,000 mortgage can cost the consumer; just that one point.” he said.
If you look closely at Experian’s website, the terms and conditions state: “In no event will Experian warrant or guaranty the correctness, comprehensiveness, completeness, accuracy…. of any information products or services on this website.”
Bingham says MyFico.com will give you the same score the lenders use, which will save you a lot of hassle in the long run.
“I got the mortgage. I was very happy about that. I’m going to have to pay a little bit more, but it’s more the frustration and the time, the phone calls and the runaround,” Matsunaga said.
Another thing to keep in mind is if you get a pre-approval a few months before you find a house, your lender could run another credit report before the closing.
One late payment could lower your score and that could cost you thousands.
Experian told us there are dozens of different models for calculating a credit score and they are not transferable from one lender to the next.
A spokesperson said the scores will only give you an idea of where you have weakness in your credit profile and what you can do to improve it.
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