While FICO scores are based on your credit report, they are tabulated by an independent company. A few years ago, the “Big Three” credit reporting agencies – TransUnion, Equifax and Experian – created their own credit scoring system to rival FICO. A recent article by CNN Money evidences that the rival reporting system, VantageScore, is gaining traction among lenders. This is potentially good news for Columbus home buyers!

Understanding Your VantageScore

Originally, VantageScores used a different point scale than FICO, which led to confusion among consumers. The new 3.0 version of VantageScore eliminates that problem by following the same FICO point range of 300 to 850. However, VantageScores are tabulated differently.  It’s unlikely that your VantageScore and FICO would ever be the same.

Unlike FICO, your VantageScore will take public records into consideration. VantageScore will also consider your rental history and record of utility payments. This will help an estimated 30 million consumers who do not have a traditional FICO score because they have never borrowed money.

VantageScore also treats collection accounts differently than FICO. Under VantageScore, you will not lose points for having a collection account on record, so long as the outstanding balance is zero.

Who Uses VantageScore?

While company names are not revealed, VantageScore claims that 4 out of the 5 biggest mortgage lenders in the country use VantageScore in credit decisions. VantageScore also claims use by:

7 of the top 10 financial institutions
6 of the top 10 credit card issuers
4 of the top 10 car loan companies

One reason VantageScore appeals to creditors is that it provides a more complete picture of how a consumer treats their obligations as a whole. We will probably see wider use of VantageScore under the new 3.0 version being rolled out to lenders.

Your Columbus Home Buying Resource

Please keep in mind that both FICO and VantageScore place priority on your monthly payment habits and use of credit. Paying your bills on time, and limiting your use of available credit, will help you have a good credit score. And while VantageScores could be more favorable to home buyers, you won’t have any control of what credit scoring model your lender chooses to employ.

We hope this information helps you with your home ownership goals! We have an excellent network of lenders who can help you pre-qualify for your mortgage. As your Exclusive Buyer’s Broker, we will be happy to refer you to trustworthy mortgage professionals in Columbus!

Contact us and learn more about home buying strategies in Central Ohio! Also, download our free e-book for immediate tips that you can put to use today.

Andrew Show
Broker, CEBA, CEBA-M, CNE, CSP, ABR-M, e-PRO, GREEN
Buyer’s Resource Realty Services
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax

www.BuyersHome.com
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