A prospective home buyer with a limited credit history or past credit slip-ups canಌ face difficulty finding a lender to obtain a mortgage. Lenders are frequently unwilling to take on the risk of approving borrowers who lack high FICO scores, which require the regular use of credit and a track record of on-time payments. Fortunately for such borrowers, another method to measure creditworthiness, known as VantageScore, has emerged to compete with FICO. Before you choose a lender, ask prospective lenders which model they use. Lenders should disclose this information.

What Is a VantageScore?

VantageScore is a consumer credit rating score created in 2006 as an alternative to the FICO score. Vantage was developed by the three different 澳洲幸运5官方开奖结果体彩网:credit rating agencies: Equifax, Experian, and TransUnion. Using a method different from FICO, it requires less 澳洲幸运5官方开奖结果体彩网:credit history🍷 to establish a score, and itꦕ is more forgiving with certain types of derogatory information, such as paid collections and late credit card payments.

Here's how it works. The VantageScore uses information provided by the three agencies from consumer credit files. The following is a list of data compiled to determine a consumer's VantageScore—ranked in order from most to least influential:

• Payment history
• Type of credit and age of the account(s)
• Credit limit usage by percentage
• Total balances and debt
• Credit inquiries
• 澳洲幸运5官方开奖结果体彩网:Available credit

The score originally ranged from 501 to 990, where a lower score was considered a higher risk. Conversely, a higher score was deemed a lower risk. The new VantageScore 3.0 ranges from 300 to 850.

VantageScore vs. FICO Score

澳洲幸运5官方开奖结果体彩网:FICO scores are the most widely used scores used by lenders to determine the creditworthiness of consꦇumers. This means more institutions use FICO over any other scoring model to decide if someone should get a loan, mortgage, or any other credit product. Most lenders require consumers to meet minimum FꦗICO scores before advancing any credit.

Like the VantageScore, FICO uses a combination of factors based on a consumer's credit file to determine a score. These include—from most influential to least:

• Payment history
• Amounts owing on each account
• Credit history length
• New 澳洲幸运5官方开奖结果体彩网:consumer credit files opened
• Mixture of credit

FICO generates scores between 300 and 850. Any score that falls below 580 is considered poor. Scores between 580 and 669 are deemed fair, while those between 670 and 739 are good. Scores from 740 to 799 are very good. Anything over 800 is considered exceptional.

Ask Before Signing

The best way to find out is to ask which kind of scoring model the lender uses. Based on the numbers provided by VantageScore, there's a good chance you'll find a creditor who uses the model. According to VantageScore, more than 2,200 lenders use its scoring model, including some of the largest banks in the United States.

VantﷺageScore is embedde🍒d in the Consumer Financial Protection Bureau (CFPB) and the Nationwide Mortgage Licensing System & Registry.

Don't Put All Your Eggs in One Basket

Before you go out, keep in mind that few lenders have abandoned FICO entirely. Most use a combination of both—particularly for borrowers with credit issues. This is why it's important for consumers to understand the scoring model used by a lender before signing a loan application and agreeing to a credit pull. Submitting loan applications haphazardly to land a hit can result in excessive 澳洲幸运5官方开奖结果体彩网:credit inquiries, further depressing a credit score.

Part of a 澳洲幸运5官方开奖结果体彩网:loan officer's job is to understand their employer's criteria for approving applicants. This includes knowing which credit models are used and how they ar𝔉e weighted versus one another. Borrowers who want to be scored by VantageScore should glean this information from the loan officer up front.

The Bottom Line

Prospective homebuyers who lack an established credit history or have🐻 a low FICO score may benefit from choosing a lender that uses VantageScore. Since the VantageScore model places less emphasis on credit history and is more forgiving with some derogatory information, potential borrowers might have an easier time accessing financing.