Hey folks, hope you’re doing well. I’ve got some interesting news. I appreciate you watching this month’s breaking down the mortgage. This month we’re going to discuss the new scoring model FICO.
Everybody knows FICO. You know the FICO. What’s your FICO score? FICO is your Fair Isaac company but FICO versus Vantage. This is a big deal and it affects you in a big way because Vantage just barely on a pilot program became available for us to use in the mortgage industry and the key takeaway is that the Vantage score can be significantly higher than a FICO score. Obviously, if the score is higher than a Vantage score, that’s a better deal for the consumer, especially first-time homebuyers, younger folks, and that’s where the Vantage score comes in.
We have one investor now that will allow us to look at both the FICO and the Vantage score on the same credit report and then run with the higher score.
So, the differences are kind of over here on the right, without going into too much detail, with FICO, six months history, a Vantage score can generate a score within just a month’s worth of history.
But the main difference, if you look down here, is it normal to have two different scores? And the answer is yes.
It’s very common for the FICO and Vantage scores to be different by 20 to 50 points, sometimes over 100 because they interpret data differently.
Over on the left, it shows that Vantage looks heavily or more heavy at the payment history than FICO, less on the utilization, a little bit more on the age and the type of credit, the balances, recent credit, available credit.
They’re just different scorecards, different models, right? But at the end of the day, do we really care?
No, we want to use the one that’s higher. That’s what we care about because if the higher score gets us a better deal, that’s the one that we want to run with.
So the key takeaway is the fact that we do have the ability now to look at Vantage scores through this one different investor.
Again, they’re going to pull a tri-merge, so all three reports from all three bureaus, but it’s going to be the FICO model.
Here’s the middle score for the FICO model, all three bureaus. And then here’s the Vantage scores, all three models. Again, if that Vantage score is 50 points higher, we can use the Vantage score.
Heck yeah, we’re running with that. And we’re going to get a better deal for the client, lower interest rate, lower cost that helps them afford more affordability.
It goes without saying. So the point is this is a good thing. Again, I have one investor that allows it.
It’s a pilot program with Fannie Mae and Freddie Mac. So I don’t think it’s going to be available for everybody until a long time from now.
But it’s obviously a huge competitive advantage at the moment. So if you got folks buying in Salt Lake City, Salt Lake County, Davis, Weber, all the usual places here in Utah, please get them over to me and let me pull both scores and see if we can get them a better deal.
We’re talking it can make a difference between them being able to afford and qualify for a home or not at all.
So it’s a big deal. I’m excited about it. You should be too. If you have any other questions, please reach out.
As always, thanks so much for watching and we’ll talk to you soon. Take care.
