No, most mortgage lenders do not typically use FICO Score 8; they generally stick to older, more conservative versions like FICO 2 (Experian), FICO 4 (TransUnion), and FICO 5 (Equifax) because these are often required for selling loans to Fannie Mae and Freddie Mac, though newer FICO models are starting to be used. FICO 8 is common for general lending like credit cards but less so for mortgages, which focus on specific risk assessment.
The credit score used in mortgage applications
While the FICO® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage: FICO® Score 2 (Experian) FICO® Score 5 (Equifax) FICO® Score 4 (TransUnion)
Key Takeaway: While you might be able to buy a house with a credit score as low as 500-580 (with FHA), aiming for a score of 620 or above is a good starting point for most loan types. For the most advantageous terms and lowest costs, a score of 740 or higher is ideal.
The FICO® Score 8 is a popular scoring model used by banks, credit unions, credit card issuers, and many other lenders.
The 3-7-3 Rule in mortgages isn't a loan type but a federal timeline from the TILA-RESPA Integrated Disclosure (TRID) rule, ensuring borrower protection by mandating disclosures within 3 business days of application, a 7-business-day wait between the initial Loan Estimate and closing, and another 3-day wait if significant changes (like APR) occur, giving borrowers time to review costs before committing to a loan.
The majority of credit providers appear to use a single credit bureau and most often that bureau is Equifax. The ACCC also found that even where the large credit providers contract with multiple bureaux, some see Equifax as the primary bureau and utilise Experian and illion as a secondary data source.
The result is that there are multiple FICO Score versions available, in addition to the most widely used version, FICO Score 8.
The 2-2-2 credit rule is a guideline for building strong credit, suggesting you should have two active credit accounts (like cards or loans) for at least two years, with consistent on-time payments for those two years, often with a minimum credit limit of $2,000 per account, to demonstrate financial responsibility to lenders, especially for mortgages. It's a benchmark to show you can handle credit well over time, reducing lender risk and improving approval odds for major loans.
"740 is typically the score necessary to qualify for the 'best' rate, but there are products and programs out there that will improve interest rates for FICO credit scores above 760 or 780." If your credit score is below 700, you might be offered higher interest rates on a loan. Improving your score could help, though.
What score model was used to calculate my score? Your score in Online Banking is a FICO® Score 8 based on TransUnion Data to manage your account and that is what Bank of America shares with you. FICO® Scores consider five main categories of information from your credit report. What are FICO® Scores?
FICO Score 8 is the most widely used model, while FICO Score 9 offers improvements by ignoring paid collection accounts, reducing the impact of medical debt, and allowing rental payments to build credit, making it potentially more favorable but less common than FICO 8, though scores between versions are generally similar as they share core principles.
It's partly true: most negative items like late payments and collections are removed from your credit report after about seven years, but the underlying debt often still exists, and bankruptcies (Chapter 7) last 10 years, so your credit isn't entirely "clear" but mostly refreshed from old negatives. The 7-year clock starts from the date of the original delinquency, not when you paid it off or sent to collections, and the debt itself can still be pursued by collectors.
The major mortgage investors typically use the Equifax® Beacon® 5.0, Experian™/Fair Isaac Risk Model V2℠, and TransUnion® FICO® Risk Score, Classic 04. They may have different scores they use for loans sold to smaller investors or keep for themselves.
If your FICO scores differ from other credit scores you see, it's likely because the scores you're viewing were calculated using a different scoring version or model. Those versions may have different information from each other.
When lenders check your FICO credit score, whether based on credit report data from Equifax®, Experian®, or TransUnion®, they're likely using the FICO 8 scoring model range between 300-850. A FICO score of at least 700 is considered a good score. Businesses also use industry-specific versions of credit scores.
The Bottom Line
FICO Score 5 is most commonly used by mortgage lenders, while FICO Score 8 is favored by credit card issuers. Unlike FICO 5, FICO 8 is more forgiving of occasional late payments and incorporates data from all three major credit reporting agencies.
To afford a $300k house, you generally need an income between $70,000 and $90,000 annually, depending on your down payment, credit, and existing debts, with a common guideline being your total housing costs (mortgage, taxes, insurance) should be under 28-36% of your gross monthly income. A larger down payment (like 20%) and lower other debts (student loans, car payments) allow you to qualify with a lower income, potentially around $75k-$85k, while less down payment or more debt might push the required income towards $100k or more.