How to Find Mortgage Lenders That Use VantageScore

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How to Find Mortgage Lenders That Use VantageScore

A person’s life may be made more fascinating by purchasing a property. One of the largest purchases a someone may make in their life, it symbolizes a feeling of success. But since it often involves a protracted, drawn-out procedure, it may also be a very frightening one. People worry about a variety of things, including their ability to get a mortgage.

With a low credit history or a history of credit mistakes, a potential house buyer may have trouble finding a lender to help them get a mortgage. Lenders typically don’t want to take the chance of admitting customers with weak FICO scores since those ratings call for consistent credit utilization and a history of on-time payments. Fortunately for these borrowers, VantageScore, a new approach of evaluating creditworthiness that competes with FICO, has arisen. The following hints will help prospective homeowners find mortgage lenders that make use of VantageScore.

Key Takeaways

  • The three separate credit rating organizations created Vantage as an alternative to the FICO score.
  • The model is more tolerant of some forms of negative information and needs less credit history to produce a score.
  • People who want to utilize VantageScore to secure a mortgage should find out which model is used from the lenders.
  • More than 2,200 lenders utilize the algorithm, according to VantageScore, to determine a consumer’s creditworthiness.
  • Mortgage applications may be directed by brokers to lenders that only employ VantageScore.

What Is a VantageScore?

As an alternative to the FICO score, VantageScore is a consumer credit rating score that was developed in 2006. Equifax, Experian, and TransUnion, three distinct credit rating organizations, produced Vantage. It establishes a score using a different methodology than FICO and is more tolerant of some forms of negative information, such paid collections and overdue credit card payments.

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This is how it goes. The VantageScore makes use of data from consumer credit files that are supplied by the three agencies. The information used to calculate a consumer’s VantageScore is listed below, sorted from most to least significant:

  • Payment history
  • Credit product and account age (s)
  • percentile use of credit limit
  • Total balances and debt
  • Credit inquiries
  • Available credit

An earlier version of the score had a range from 501 to 990, with a lower number indicating a larger risk. On the other hand, a higher score indicates a lesser danger. The new VantageScore 3.0 is in the 300–850 range.

VantageScore vs. FICO Score

The most popular scores used by lenders to assess a customer’s creditworthiness are FICO ratings. In order to determine whether a person should be approved for a loan, mortgage, or other kind of credit product, more institutions rely on FICO than any other scoring model. Before extending credit, the majority of lenders demand that customers have minimal FICO ratings.

Like the VantageScore, FICO calculates a score using a number of variables based on a consumer’s credit report. From most influential to least, they include:

  • Payment history
  • Amounts owing on each account
  • Credit history length
  • newly opened consumer credit reports
  • Mixture of credit

FICO produces scores ranging from 300 to 850. A score of less than 580 is regarded as bad. Scores between 580 and 669 are considered fair, while 670 and 739 are considered excellent. Scores between 740 and 799 are excellent. Everything over 800 is amazing.

Ask Before Signing

Asking the lender what sort of scoring algorithm they use is the best approach to learn more. There’s a strong possibility you’ll locate a creditor that employs the model based on the data VantageScore provides. VantageScore claims that more than 2,200 lenders, including some of the biggest banks in the United States, employ their rating formula.

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Some of the most important systems used in the finance sector have VantageScore integrated. It is the only scoring model that is integrated into both the Nationwide Mortgage Licensing System & Registry and the Consumer Financial Protection Bureau (CFPB).

Don’t Put Your Eggs in One Basket

Before you go, remember that not many lenders have completely given up on FICO. The majority combine the two, especially for borrowers who have credit problems. This is why it’s critical for customers to comprehend the scoring algorithm a lender uses before approving a loan application and consenting to a credit check. In order to score a hit, submitting loan applications carelessly might lead to an excessive number of credit inquiries, which can further lower a credit score.

Understanding the standards used by their organization to approve applicants is a part of a loan officer’s work. This entails being aware of the credit models that are used and how they are weighed in comparison to one another. If a borrower wants to be evaluated by VantageScore, they should ask the loan officer for this information right away.

Few lenders have entirely renounced the FICO scoring mechanism.

Can I Use a Broker to Find a VantageScore Lender?

Because mortgage brokers deal with several lenders, each of which has a separate set of approval requirements, they are a viable choice for consumers with poor credit. The lender in their portfolio that best suits the borrower’s demands may be identified by a competent broker after reviewing the borrower’s application. If a broker has a wide range of lenders, some of them ought to utilize VantageScore as their main source of credit data. The borrower might ask the broker to guide these lenders with their application.

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How Do VantageScore and FICO Score Differ?

Individual credit scores are generated using FICO (Fair Isaac) and VantageScore. Different data sources are used by the two scoring methodologies, and variables are weighted somewhat differently. VantageScores may be generated for individuals with a credit history that is less than six months old, enabling it to evaluate around 40 million more people than the FICO score. FICO scores need a credit history of at least six months.

Where Can I See My VantageScore for Free?

The VantageScore3.0 model serves as the foundation for the free TransUnion and Equifax credit ratings. VantageScore is also the foundation for the free credit scores available on Credit Karma.

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