The Difference Between Vantage Scores And Your Fico Score
Vantage scores provide an alternate version of your FICO score. One that doesnt require a large cost to be paid by the credit monitoring services. Its a joint venture between the three credit bureaus Equifax, Experian, and TransUnion.
While your Vantage score will provide a reasonably accurate picture of your FICO score, it is not the score that mortgage lenders actually use. Its sometimes referred to as an educational score, which is to say that, while theyre commonly available to consumers, theyre not used by lenders.
A common discrepancy between Vantage scores and FICO scores is in the scoring range. Vantage scores range from 501 to 990, while FICO scores range from 300 to 850. For this reason, the Vantage score you get from a credit monitoring service may be significantly higher than a FICO score pulled by a lender.
Of course, even your Vantage Score or FICO score will be different depending on which credit bureaus data was used. This is why Credit Karma now offer your score from two bureaus instead of just one.
When looking at FICO scores, however, things get even more muddled: Some sources say there as many as 56 different versions of your FICO score. According to , FICO Score 8 is the most commonly used.
Below, I will outline the differences among some scores that some credit card lenders and auto dealerships will use. Ill also describe how your credit score is used differently when you apply for a mortgage, a credit card, and an auto loan.
How Can My Fico Scores Affect My Mortgage Interest Rate
When a loan officer gets your mortgage application, they may use a pricing grid to figure out how your credit scores affect your interest rate, says Yves-Marc Courtines, a chartered financial analyst with Boundless Advice. Generally, higher scores can mean a lower interest rate, and vice versa.
From there, a mortgage loan officer will likely look at the rest of your loan application to decide whether your base interest rate needs any adjustments. For example, if youre making a smaller down payment, you may be given a higher interest rate, says Courtines.
A banks pricing grid may change on a daily basis depending on market conditions. However, heres an example of what you might expect your base interest rate to be, based on your credit score, on a $216,000, 30-year, fixed-rate mortgage.
| FICO® score range |
|---|
Source: myFICO, November 2020.
Fico Score Vs Credit Score
The three national credit reporting agencies Equifax®, ExperianTM and TransUnion® collect information from lenders, banks and other companies and compile that information to formulate your credit score.
There are lots of ways to calculate credit score, but the most sophisticated, well-known scoring models are the FICO® Score and VantageScore® models. Many lenders look at your FICO® Score, developed by the Fair Isaac Corporation. VantageScore® 3.0 uses a scoring range that matches the FICO® model.
The following factors are taken into consideration to build your score:
- Whether you make payments on time
- How you use your credit
- Length of your credit history
- Your new credit accounts
- Types of credit you use
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Which Mortgage Lenders Use Fico 8
Asked by: Orland White
FICO 8 is a released in 2009. Since then, only a few lenders have adopted it. The vast majority of lenders still rely on FICO 2, 4, and 5 scores, which are all part of a larger report that mortgage lenders can obtain called the residential mortgage credit report .
Equifax, Experian, and TransUnion1 FICO Score 8 is the most commonat least 700 is considered a good scorepredict the likelihood of not paying as agreed in the future on any credit obligation
What Is A Good Fico Score
Borrowers with higher scores have higher approval odds and greater access to competitive rates. What is considered a good FICO Score depends on the lender or creditor evaluating a consumers credit profile. That said, lenders typically view FICO scores above 670 as good while the official FICO scale classifies scores between 670 and 740 as Good.
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How Do I Find Out My True Credit Score
With so many credit scoring models, you really dont have just one true score, but many. Your scoredepends on all of the factors mentioned above in addition to what type of lender you apply to for credit.
Its important to remember that everyones scores are different because they represent a snapshot in time of the particular individuals current and past credit habits. By following the tips mentioned above long term, you can definitely build and maintain scores to be proud of.
What Was New With Fico Score 9
While the underlying foundation of FICO Score 9 is consistent with previous versions, there are several unique features that make up FICO Score 9:
- Any third-party collections that have been paid off no longer have a negative impact.
- Medical collections are treated differently than other types of debt. Unpaid medical collections will have less of a negative impact on FICO Score 9.
- Rental history, when it’s reported, factors into the score. This may be especially beneficial for people with a limited credit history.
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Ok So Which Of My 3 Fico Scores Do Lenders Use
When your lender pulls your credit, you will get not one but three scores. Thats because there are three main credit bureaus. Which one does the lender use?
The answer is your middle score.
As the name suggests, the middle score is the one in the middle of your three scores. For instance, if your credit report shows 690, 700, and 710, then 700 is your middle score.
If you are applying with someone else, the lender will use the lower of the two middle scores for eligibility purposes.
The following table demonstrates middle scores.
| Bureau |
What Impacts Your Fico Score
In general, FICO scores are calculated based on five major factors, each with its own weight. Heres what impacts your FICO Score.
Payment History
Accounting for 35% of your credit score calculation, payment history is the most impactful component of your credit score. This metric includes several factors like the number and severity of late payments and the presence of adverse public records like lawsuits and bankruptcies. To improve your credit scoreor keep it strongmake consistent, on-time payments on all of your accounts.
Amounts Owed
The amounts owed category represents the total outstanding balances on all of your accountsor how much money you owe. As the second most important element of your credit score, it accounts for 30% of the calculation. For that reason, making more than the minimum payment each month and paying down debts quickly can improve your credit score.
Length of Credit History
In general, the longer your credit history, the higher your score. Even though the length of your credit history only accounts for 15% of your score calculation, it can be a frustrating metric to manageespecially if youre building credit for the first time. While you cant go back in time and open credit accounts sooner, you can strengthen this portion of your score by keeping your oldest accounts open and in good standing.
New Credit
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When Will Lenders Start Using Fico 10 And 10t
FICO 10 scores are now available for use by the three major credit bureaus. Shellenberger said adoption by lenders will take time. It can take months or usually longer for large lenders.
Right now, most lenders still use the FICO 8, which was introduced in 2009, for most non-mortgage lending decisions. For mortgages, FICO 2, 4 or 5 are used.
How Does Credit Score Determine Loan Type
Conventional loans require that you have a higher credit score, while Federal Housing Administration loans are a bit more forgiving when it comes to your score.
With an excellent credit score, you can expect to pay less for your loan because your interest rate will be lower.
Not only will a poor score affect your ability to get a loan, but if you do qualify for one, you could be paying thousands of dollars extra over the life of your loan due to a higher interest rate.
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Why Is It So Important To Get A Low Interest Rate On My Mortgage
You probably already know that a lower interest rate means a smaller monthly payment. But do you know just how big of an effect a smaller monthly payment can have?
Lets look at an example. According to the U.S. Census Bureau, in March 2018 the average sales price of a new home sold in the United States was $366,000. If you were to go to the closing table with a 20% down payment and opted for a 30-year fixed-rate mortgage, heres how much it would cost you over time depending on your interest rates.
| $3,408 | $102,183 |
In this example, boosting your credit before you get a mortgage could save you $284 per month, $3,408 per year, and $102,183 over the life of your loan! What would you do with all of that extra cash?
Pro tip: Use our to learn more about what could impact your credit scores.
Ensure Your Credit Report & Score Are Error
Lenders and credit bureaus are becoming more sophisticated at assessing consumer risk. Because of this, your credit profile is more important than ever, if you are going to apply for a loan. And unfortunately, major data breaches have made it easier than ever for identity thieves to steal your personal data and open up lines of credit in your name.
This is why it is essential to monitor your credit reports to ensure there are no problems with your credit. Should you find any errors with your credit reports, you should fix them immediately to prevent damage to your credit score. You can get copies of your credit report for free from AnnualCreditReport.com and from other companies.
Finally, it is a good idea to check your credit score every so often. Keeping track of your credit score will alert you to any changes and help you know if you are moving in the right direction. Thankfully, you can check your credit score for free with one of several companies, including Credit Karma, Credit Sesame, and others. Many banks and credit card companies also offer this service to their customers.
Some companies, such as Fico, do not offer free credit scores. But you can often find Fico coupon codes to save money if you decide to buy your credit score/report from them.
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Which Credit Scores Do Mortgage Lenders Use
When you apply for a mortgage, lenders will generally request all three of your credit reports and a FICO® Score based on each report. However, the type of FICO® Scores they request are often older versions, due to guidelines set by government-backed mortgage companies Fannie Mae or Freddie Mac. It can be important to know about these different FICO® Score versions when you’re planning to buy a home.
What Is Experian Boost
- A free service from credit bureau Experian that may increase your credit score instantly
- Works by adding positive payment history to your credit report for things like phone bills or even Netflix payments
- These recurring utilities and other monthly payments often arent factored into your credit history
- Average Experian Boost users see their Experian-based FICO Score 8 rise by 13 points
As the name suggests, its a credit score boosting program from credit reporting company Experian, which together with Equifax and TransUnion, makes up the three major credit bureaus.
How it works is fairly simple you sign up for Experian Boost, then connect your bank account to your profile.
This essentially provides read-only access to your bank account history, allowing Experian to quickly scan and find qualifying payment history.
Once the scan is complete, you can choose and verify any positive payment history youd like added to your credit file.
So if you have a Netflix bill youve been paying on-time for the past five years from said bank account, you can add it to your credit history.
The same goes for a cell phone bill or another monthly utility that youve paid on-time for years.
Instead of credit bureaus only counting things like your credit card payments, auto loans/leases, and mortgages, they can include items that often dont make the cut.
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Any Fha Lenders Using Fico 8 Scores
Hello All,
Long story short, My wife and I have decided to put our house on the market and we found another house we like and want to make an offer. My current FICO 8 scores are 649 655 and 659 however my Mortage scores are 624 610 and 619 I have no baddies at all but I did use the credit cards for the holidays. I plan to pay down some of the cards to 20% to bump up the scores however I woudl rather use the extra 5-6k for purchase if possible. Does anyone know of any lenders using the FICO 8 scoring system for an FHA Loan prequal/Preapproval?
Hello All,
Long story short, My wife and I have decided to put our house on the market and we found another house we like and want to make an offer. My current FICO 8 scores are 649 655 and 659 however my Mortage scores are 624 610 and 619I have no baddies at all but I did use the credit cards for the holidays. I plan to pay down some of the cards to 20% to bump up the scores however I woudl rather use the extra 5-6k for purchase if possible. Does anyone know of any lenders using the FICO 8 scoring system for an FHA Loan prequal/Preapproval?
Not for FHA loans. Use the funds to pay down your debt. $5k on a mortgage is less than $25/month on a 4% mortgage amortized over 30 years.
It is more important to actually qualify for the loan. You are about one point from qualifying for FHA with many lenders from a credit score POV.
How is the rest of your file?
Do You Qualify For A Mortgage
You can check your own credit score online, and talk with a lender to see whether you qualify for a mortgage based on your current score.
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How Can I Access My Credit Score
Per the Federal Trade Commission, you can pull one free copy of your credit report from each of the three main agencies per year.
You also may have frequent access to your score for free through your bank or credit card issuer.
Keep in mind that the free score you have access to through your bank or credit card company is not your comprehensive report, but it will give you a snapshot of where you are to help you get where you want to go.
Introducing The Fico Score 10 Suite The Most Recent Updatedfico Score Version
FICO Score 10 relies on the same design and key ingredients of prior models as well as captures the subtle shifts in consumer credit data that have occurred over the 5+ years since FICO Score 9 launched, such as the increasing use of personal loans, especially for purposes of debt consolidation.
As long as consumers practice good habits like consistently paying bills on time, lowering their debt as much as possible, and applying for credit only when needed, they can achieve and maintain a good FICO Score 10.
FICO Score 10 T builds on FICO Score 10 by also assessing “trended credit bureau data” when determining your score. Scores that don’t use trended data typically use the most recently reported month of data to drive certain components of the score such as the most recently reported balance and/or credit limit on an account.
The trended data allows the credit scoring model to determine what your “trend” is: are your balances trending up, down, or staying the same? Someone whose balances are trending up may be higher risk than someone whose balances are trending down or staying the same.
FICO Score 10 and FICO Score 10 T are currently available to lenders.
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