Ignore the news…

There’s a lot of talk about the new scoring model called VantageScore.

Proponents say that it will boost a person’s score and help people with no credit history build a strong credit score.

Here’s the bottom line: don’t even clutter your mind.

Now… the back-story for those that want it:

Until the majority of lenders are using a new scoring model, the FICO score will remain the main credit scoring system out there.

As of right now, major mortgage giants like Fannie Mae and Freddie Mac are not using VantageScore. In fact, I have never heard of ANY lender who uses VantageScore.

When deciding whether to extend a person a loan (a mortgage in particular), banks and lenders want to know what the risk is. Currently, the model used to determine creditworthiness is FICO, and almost exclusively FICO (for mortgages Underwriters review a tri-merge credit report with all three credit bureaus).

So if a person wants to qualify for a loan, or purchase a home or refinance their current mortgage, they must follow the FICO model and demonstrate the behaviors that determine FICO scores. Underwriters will not be looking at any “new” credit reports with different scoring systems.
Ignore everything else because it will not make an ounce of difference if you lender is not looking at it. All it will do is paint an unrealistic picture.

I want you to focus on reality. And the reality is this: Almost every lender out there relies on FICO and only FICO when determining a credit score.
If you have any questions about credit-scoring models or reviewing credit reports, be sure to leave a comment on my blog.


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    Comment by Piper on April 4, 2014 at 11:47 pm

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