The average credit score model often works much better for a consumer than the commonly accepted middle score one. Mostly, the average credit score is used primarily by sub prime lenders and gaining popularity. Sub prime lenders lend money to the people with credit rating other than A or A-.
With the middle credit score model, when a bank looks at your 3 in 1 credit report, it looks squarely in the middle. Check FICO score for more information. So if you have scores of 720, 676, and 660, bank takes 676 and your loan conditions such as interest rate, broker fees, etc. are based on the credit score of 676.
That means you just missed the credit score 680 by 4 points. And 680 is an important FICO credit score threshold you don't want to miss too often.
If a bank uses the arithmetic average credit score, here is how it works:
Add 720, 676, 660 and divide the result by 3. You will get 685. This is much better than 676, especially when you apply for certain mortgage programs where minimum credit score is required.
If you applying for a mortgage and your credit is not the best, it makes sense to check with your mortgage broker is he/she works with banks that use arithmetic average credit score. It may be to your advantage.
