Hey folks, hope you’re doing well. Welcome to this month’s Inside Track. I’ve got some good mortgage news for you here. I know mortgage news is very exciting, but this actually is pretty cool. I’m going to teach about the FICO versus Vantage score.
Everybody knows what a FICO score is, right? That’s your Fair Isaac company is what that stands for. There’s also a different type of score called a Vantage score, and they’re basically just ways that creditors use models to help people get credit, be it mortgage, cars, credit cards, auto loans, student loans, etc. In the mortgage industry, we’ve always used a FICO score, and that’s been the way, but they’ve just opened it up where we can now use a Vantage score. There are differences between the two, and this can affect you or others that you know in a really good way.
The main thing being that the Vantage scores oftentimes are a bit higher, and so what happens is we can run with the higher score if the Vantage score is a better score, and it helps get someone a better deal. We can absolutely do that under a new pilot program, and that’s a very big deal.
Let me give you some examples over here. If you look over here on the right, these are kind of differences between the two, and the main difference here is this very first one. For people that are younger that have what we call a thinner credit file, like less history, FICO really hits people hard for the history and the depth. Vantage is much easier on folks.
With a FICO score, if you’re a younger person, you’ve got a child, for example, they’re trying to establish credit, it can take a good six months to even get a score out of FICO. Whereas the Vantage score, after a month only and with just one account, you can just get them a credit card, get them on your card, get them their own card, whatever you need to do. Boom. They can start building their score.
Also with the payment history and a few other things, the Vantage score can be a little bit better, a little bit more advantageous. So the gap between the two. This is a good little piece I found, and you can see this too if you just Google FICO versus Vantage. The scores are different. Your score may differ between the two because of the way that they weigh the different items. They do it separately, right?
They look at different things, different buckets. Over here on the right at the bottom, you can see how they do that between payment history, what’s called utilization, how you use your card versus how much you owe, age of the accounts, things like that.
But the main thing is with someone that has an invisible or a thin file, like I said, the Vantage score could be a lot better, and they might not even have a FICO score. Or conversely, if you have a high credit card debt, it might be better to have a Vantage score than a FICO score because FICO penalizes high utilization more heavily. So folks that want to do a debt refinance, for example, debt consolidation, and they’ve got a lot of credit cards, might be better to run with a Vantage score and be able to get a much better deal on a refinance.
Just wanted to give you a heads up on this. It’s a big deal. It’s still coming, kind of in a pilot stage, but we do have an investor that allows us to use these. So we literally pull what’s called a trimer. We have all three FICO scores and all three Vantage scores, and of course it’s the middle of the three that you run with. We can look at Vantage. It’s a big deal.
If you have questions on this or anything else, please reach out to me directly. Never too busy to help. Thanks for watching, and we’ll talk to you soon. Take care.
