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IF YOU’RE IN THE market for a home and a mortgage, this is a tough time, with shrinking inventory, lofty home prices and interest rates that feel overwhelming. I know all about this—because I’m a mortgage broker.

For many, today’s housing and mortgage market mean putting their homebuying dreams on hold. What if you go ahead, despite 30-year fixed-rate mortgages above 7%? I advocate controlling what you can. One of the variables that you can influence—and which can help save a tremendous amount of money—is your credit score.

Below are the six things I wish clients understood about their credit score when it comes to mortgage lending:

1. You don’t have one credit score. You don’t have three credit scores. Instead, you have multiple credit scores. Experian, Equifax and TransUnion are the three main repositories of consumer credit data. These are the folks to whom your creditors send monthly data about credit usage, late payments and so on.

VantageScore and FICO are the two main owners of consumer credit algorithms, and both companies have multiple scoring models. VantageScore is often used by consumer credit-monitoring services. Those scores will not be the same as the scores used by your mortgage lender. If I had a dollar for every time clients were shocked that their mortgage score was lower than what they thought it would be, well, I wouldn’t be retiring, but I’d be making some large donations to charity.

Mortgage lenders use FICO score models Nos. 2, 4 and 5. If your consumer reporting service tells you that your score is 750, be prepared: Your FICO score used in mortgage lending will likely be much lower due to the different scoring algorithm used. This discrepancy has huge consequences for borrowers. As I write this article, below is how rates compare for various credit scores.

2. The mortgage industry is in the process of adopting an entirely new FICO model. It’s known as FICO 10T and it’ll give trended data. Think of it this way: The current FICO models are like a static picture on Instagram, but the new trended data model will show a lender a short video, similar to a TikTok video. It’s predicted that these models will better reflect consumer behavior, so—if you have anything to clear up on your credit report—it’s important to start now. These models are set to be the industry standard by 2025.

3. It’s crucial to know your scores before starting the mortgage process. The best way for consumers to do this is to head to myFICO.com (no endorsem*nt deal here), choose the “advanced” service and pay roughly $30. This’ll give you a full credit report. You will have to sign up for a monthly subscription plan, but just set a reminder in your calendar to cancel the subscription before the end of the following week.

This report will provide the detailed scores used in auto, mortgage and credit card lending. Fear not: There’s no negative impact on your credit score if you check your own score. You can also get a free copy of your credit report at AnnualCreditReport.com, but this will only give you the data reported on your credit report. It won’t provide any scores based on that data.

4. When underwriting your loan, lenders will use the median score. That means we line up your three scores in order from lowest to highest, and choose the score in the middle. That effectively means you can have one bad grade from one credit reporting service without risking your entire mortgage pricing.

If your loan has two legal borrowers, such as two spouses or two partners, we’ll use the lower of the two median scores for mortgage lending purposes. Result: It can sometimes be advantageous to remove one borrower from the loan, though this also means that the spouse with the lower score won’t receive the credit-score benefit of making regular mortgage payments. What if you need both your salaries to qualify for a mortgage? You need to know who has the lower FICO score and then work to improve that person’s credit.

5. Having a mortgage lender run your credit won’t greatly affect your score. For most clients, it’ll mean a five-to-eight-point drop. Once a mortgage lender runs your credit, you have 14 days to safely shop for mortgages and apply to as many lenders as you like without any impact on your credit score. The consumer credit-reporting agencies have a policy that you won’t be penalized for shopping for similar types of credit within a limited time frame. They get that you’re trying to find the best possible deal.

6. For the sake of your own sanity, take steps to limit spam emails and calls. Register with OptOutPrescreen.com and DoNotCall.gov. Many mortgage companies buy “trigger” leads, so once you apply with one mortgage lender, the notification that that inquiry has been made gets sent to companies who pay for that data, and you’ll be fighting spam calls and emails if you haven’t registered with these two websites. Clients have reported being bombarded with as many as 45 calls in a 24-hour period.

There are countless articles about what you can do to raise your score, but here’s what I recommend: Keep it simple. Don’t get in a lot of debt. When you do use debt, do so responsibly. Despite common advice to use multiple different types of credit, I personally only have one debt: a single credit card that I pay in full every month. If I were getting a mortgage, my credit score would be 803. Once a year, I buy a credit report from myFICO.com, and check my scores and the data used in generating my score. I make sure everything looks good—and then I get on with my life.

Crystal Flores is a mortgage broker in Texas. She’s a graduate of Dartmouth’s Tuck School of Business and has advised clients on debt since 2004. In her spare time, she tends to her three horses, four chickens, three miniature goats, three cats and a dog. Going to the feed store—and using her sole credit card there—is one of her major pastimes.

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ON JUNE 15, THE NEWS was broken by The Oregonian of a massive hack at Oregon’s Department of Motor Vehicles, apparently leading to the theft of sensitive details about most of Oregon’s 3.5 million holders of a driver’s license or ID card. Incidents like this, along with the huge 2017 Equifax hack, give criminals cheap and easy access to key personal information that many organizations routinely use to verify our identities and screen our credit applications.

That kind of data make it a breeze for crooks to appropriate your identity for the purpose of opening credit accounts in your name. It also makes it simple for criminals to open a bank or investment account in your name, one which they control and which could potentially be linked to your existing, legitimate accounts. Once linked, they quickly transfer out funds you might never see again.

I’ll wager more than a few HumbleDollar readers and authors, as well as folks they know, have been victims of crimes involving identity theft. Cybercrime today seems unstoppable, but the worst thing you can do is ignore the risk and hope you won’t be affected. Hope is not a plan.

My daughter, an Oregon resident, just asked me what she could do to protect her identity, money and sensitive accounts from security breaches. My response: Three simple steps can help you avoid the worst consequences of identity theft and an assortment of cybercrimes.

1. Freeze your credit reports at Equifax, Experian and TransUnion until you next need credit. It’s been nearly a decade since I froze ours at the big three credit reporting companies, after a security incident at a nonprofit where we volunteered regularly. Today, it’s simpler to both freeze and temporarily unfreeze credit files when you need access to credit. While your files are frozen, it’s much harder for someone to use your stolen identity to open a fraudulent account in your name.

2. Enable two-factor authentication (2FA) on all sensitive online accounts. This technology makes it extremely difficult for thieves to log into your account, even when they’ve guessed your password or acquired it through phishing or a big hack. There are several 2FA technologies in wide use today. Some types are more secure, but enabling any 2FA on your key accounts is far better than no 2FA at all.

The most important accounts to protect with 2FA are your Apple, Google or Microsoft ID accounts, email accounts which receive password reset links, cellular service provider accounts, and banking or investment accounts.

3. Check your bank and brokerage balances monthly, and your credit reports annually. When you suffer an identity theft crime, your chances of recovering any lost money, or reversing unauthorized credit account charges, rise a lot if you catch and report it early, as one couple learned.

Yes, if you want to improve your investment behavior, it’s best to automate your financial life, so you can ignore what Mr. Market is doing each day to your investments, as Rick Connor noted recently. Still, for security purposes, it’s wise to glance monthly at your accounts to see if there’s been a sudden, unexpected drop in your balance or some other suspicious activity. To check for fraudulent new accounts, it's also good to review your free credit reports each year.

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WHAT’S YOUR CREDIT score? That’s hard to answer because none of us has just one. You likely have a dozen or more. So how did consumers come to think that one credit score—the FICO score—is the sole reflection of their ability to repay a loan?

Following decades of growing consumer spending, and associated data collection, the Fair Credit Reporting Act of 1970 required credit bureaus to open their files. The intent was to protect consumers from lenders who were relying on incorrect information. The law allowed everyday Americans to review their data for errors, while also requiring credit bureaus to delete unrelated information.

Accuracy was important because consumers were increasingly using borrowed money to pay for purchases. Credit bureaus, however, were still struggling to find an industry-standard credit score which lenders could apply consistently. Enter the Fair Isaac Corp. It developed the FICO credit score in the late 1980s. Using data from the credit bureaus, its proprietary models applied a weight to each input to calculate a score.

Fair Isaac disclosed a general outline of the information it used to compute its score. The finer points of FICO methodology are still shrouded in mystery, however, and subject to change at its discretion. In the 1990s, my wife worked in a consumer credit organization that utilized FICO scores. She saw firsthand that the secrecy surrounding Fair Isaac’s methodology led many to simply take the scores on faith and accept that they accurately reflected a consumer’s creditworthiness.

With little competition at first, Fair Isaac enjoyed a near-lock on the sale of credit scores. By 2006, to reduce costs, the three largest credit bureaus combined to develop and introduce their alternative model, VantageScore. Depending on the purpose, lenders often rely on both sources, but FICO remains the industry leader.

The pandemic is changing the credit scoring landscape further still. The Wall Street Journal recently reported that FICO scores are becoming a smaller factor in underwriting decisions. Instead, many banks and other lenders have begun using internally generated scores. These are based on a wealth of new data available to predict who will pay and who won’t. Currently, there are no requirements to share these internally generated scores with consumers.

Creating scores internally saves on fees. More important, it leads to faster credit decisions and allows lenders to assess borrowers with brief or nonexistent credit histories. For example, FICO scores don’t reflect loan deferment and forbearance programs, making it harder for lenders to evaluate some borrowers. Also, more than 50 million Americans lack a FICO score because they have thin or nonexistent borrowing histories.

For consumers, the rules haven’t changed: Higher scores are better. Using credit responsibly will lead to higher scores, regardless of which credit scoring model is employed. But getting rid of errors can also raise scores. One reason for the multiple credit scores for each of us is a lack of data consistency.

Lenders share their data with credit bureaus, but not uniformly. One bureau may show a collection account while another does not. The bureaus are competitors, so they don’t share information. Also, credit bureaus and financial institutions make reporting mistakes.

That’s why it’s important to review our reports with the three largest credit bureaus: Equifax, Experian and TransUnion. We’re entitled to a free copy of our credit report from each one every 12 months. Keeping them complete and accurate reduces the risk that an undeserved score might hurt our creditworthiness.

Phil Kernen, CFA, is a portfolio manager and partner with Mitchell Capital, a financial planning and investment management firm in Leawood, Kansas. When he's not working, Phil enjoys spending time with his family and friends, reading, hiking and riding his bike. You can connect with Phil via LinkedIn. Check out his earlier articles.

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EVERY WEEK, YOU'RE allowed to geta free copy of your credit report from each of the three major credit bureaus: Equifax, Experian and TransUnion. Your all-important credit score is based on the information in these reports. To view your three reports, go to AnnualCreditReport.com. It’s a good idea to check your credit reports at least once a year, especially if you plan to borrow a large sum to buy, say, a house or car. You might even rotate through the three credit bureaus, reviewing a report from a different bureau every few months.

What should you look for? See if there are any accounts you don’t recognize. That could be an indication that you’re a victim of identity theft.Also check your credit reports for inaccuracies, such as incorrect information about debt payments, past employers or places where you have lived. Look for any debts that are listed more than once. Filed for bankruptcy more than 10 years ago? That should no longer appear in your credit reports.

If you spot erroneous information in any of your three reports, contact either the credit bureau itself or the company that supplied the incorrect information. Through their websites, Equifax.com, Experian.com and TransUnion.com, all three credit bureaus allow you to submit an online request to have inaccuracies fixed.

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