Credit Scores Open the Door, or Keep It Closed

When you apply for a mortgage, one of the first things the lender will look at is your credit score.

That number will determine how much the loan is going to cost you; indeed, it will determine whether you qualify at all. Knowing where you stand can also protect you from being steered into an inappropriately expensive loan.

Because of this, one of the first steps serious home shoppers should take is to pull their own credit scores.

First, you need to be clear about which score you're looking for. There isn't actually one single score, but rather a variety of scores. All scores are generated by complex mathematical models that evaluate information in a person's credit file to estimate the risk a company incurs by lending money. The bigger the perceived risk, the more interest lenders will charge. The vast majority of mortgage lenders rely on scores using Fair Isaac's model, better known as FICO scores. They range from 300 to 850, with scores above 760 qualifying for the best rates.

Each of the three national credit bureaus -- Experian, TransUnion and Equifax -- calculate a FICO score based on the information in their files. Because of that, you actually have three FICO scores, one for each of the bureaus.

FICO's competitors include the credit bureaus' own VantageScore, which evaluates consumers on a range from 501 to 990.

Which score you should check depends on how soon you plan to apply for the loan and whether you know which score your lender uses.

Personal finance experts recommend checking your score about six months before you expect to need the loan. You can do this as many times as you want yourself without any negative impact on your score, though too many checks by lenders can lower it.

"If you've got a problem with the score, a six-month lead time gives you enough time to fix things," said Steve Bucci, president of the Money Management International Financial Education Foundation and author of "Credit Repair Kit for Dummies." If you're just checking your score casually, you can use any of them, said Craig Watts, spokesman for Fair Isaac. "It's like checking your blood pressure at the kiosk at the pharmacy. It doesn't matter if that's 10 percent off from what the doctor would see in his office."

As your need for a loan draws closer and if your credit score is borderline between two categories, you may want to be more specific about the score you check. In particular, "you want to get the same score your lender is going to be using," Bucci said.

If you know where you plan to apply for the loan, you can ask. Otherwise, it's generally safe to assume the lender will use FICO scores, which gives several options for checking your score. For all of them, you need your Social Security number, birth date, current and previous addresses.

One option is through MyFICO.com, a Web site run by Fair Isaac. There you can purchase one score and one bureau report for $15.95, or a package of all three reports and scores for $47.85. This is the route Bucci recommends.