Ken Harney says...

Kenneth Harney is a nationally-syndicated columnist on real estate for the Washington Post Writers Group. Here’s his March 29 post about credit scores.

When is your “credit score” irrelevant in buying a house or refinancing a home loan? A new federal legal settlement with a major credit bureau has the answer: The only score that matters is the one your lender uses to evaluate you, not some random score you got on a website.

All the others you might buy or see — there are dozens of them hawked on the Internet — may be interesting, but they won’t affect the interest rates you’re quoted, the fees you’re charged or whether your application gets approved or rejected.

The new legal settlement from the Consumer Financial Protection Bureau alleges that Experian, one of the big three credit reporting bureaus, “deceptively marketed credit scores to consumers by misrepresenting” them as “the same” as what their lender would use in determining whether and on what terms to offer them a loan. Experian’s promotions appeared on third-party websites, banner and display ads, direct mailings and sites such as AnnualCreditReport.com.

Which brings us back to home loans: If you’re like many home buyers and owners, you’ve seen online pitches and ordered your scores, often free. They may have come with tie-ins to credit card offers or credit monitoring and identity theft protection services. One site may have said your score is 788, ranking you as “excellent” on their scale. Then you apply to a lender for a preapproval and get the sobering news: Your middle FICO score — lenders usually pull scores from all three bureaus — is a 716, and that’s what we’ve got to use to price your loan.

The score is okay, but it’s 85 points below where you thought you were, and below the cutoff point for the best interest rates and terms. The FICO score your lender pulls for your application may not be the same as the score your credit card company might be sending you every month online. Or, perplexingly, it might even be different from the FICO score you get on MyFICO.com.

That’s because FICO has introduced multiple models over the years, each with what the company describes as consumer-friendly improvements. The latest is FICO 9. The most widely used is FICO 8. The bottom line? Never depend on generic scores available online as part of your home financing planning process.

Tammy Engel is your local Mortgage Advisor and she’s been working for your best interest since 1990. Contact her at (661) 822-7325 for help with purchase, refinance, and reverse mortgage. NMLS #235051/303625