For decades, the mortgage industry relied on one set of scores: Classic FICO. That’s changing. Thanks to a push to promote competition, make credit scoring more inclusive, and help more Americans become homeowners, the Federal Housing Finance Agency (FHFA) has approved the use of new credit score models such as FICO 10T and VantageScore 4.0.
A different model can mean a different number for the same person. VantageScore says its model can score about 33 million adults that Classic FICO’s model can’t. So the score you saw on an app last month may not be the one your lender pulls — and a score that looks one way in one model can look different in another.
Remember: the models may be new, but the basics haven’t changed.
Do Your Part and Partner With a Pro
Engage with a lender as soon as possible. Your credit score is important, no matter how it’s measured. Following the same basic rules will benefit your profile in the old and new score models:
- Pay every bill on time — payment history is still the biggest factor.
- Keep credit card balances low relative to your limits.
- Don’t open a bunch of new accounts right before applying for a mortgage.
- Keep older accounts open — a longer credit history works in your favor.
- Check your credit reports for errors and dispute anything that isn’t right.
The new models are designed to give more people a fair shot at homeownership. Knowing where you stand — and working with a lender early — puts you in the best position to take advantage of it.
Angela and I have a trusted lender professional who can guide you every step of the way as you begin your home purchasing search.
Thinking about buying or selling in the Frisco area? Contact Tom May at 214-223-4600 today.
This post is general information only, not financial advice. Talk with your lender about which credit score model applies to your loan.