Relying on an inflated VantageScore® can lead to thousands in unexpected closing costs on a home loan
Homebuyers can get their FICO® Score for free using Home.com's ScoreGeniustm
MADISON, Wis., May 16, 2022 /PRNewswire/ -- A new study by Home.com revealed VantageScores® from a popular online credit monitoring service were 20 points higher on average than FICO® Scores used by lenders. Home.com's new service ScoreGeniustm shows consumers FICO® Scores, helping consumers avoid thousands of dollars in unexpected closing costs on a home loan.
FICO vs Vantage credit scores
FICO® and Vantage are competing brands that produce consumer credit scores used to measure the trustworthiness of a borrower to repay a loan. Although credit monitoring sites often show VantageScores®, mortgage lenders almost exclusively use FICO® Scores to determine loan eligibility and costs.
The Home.com study asked volunteer participants to compare their VantageScore® from a well-known credit monitoring site to their FICO® Score from Home.com's ScoreGeniustm.
Fifty-four percent of participants had a VantageScore® that was higher than their FICO® Score. Within this group:
How credit score affects mortgage costs
Since FICO® Scores are the gold standard in the mortgage industry, counting on an inflated VantageScore® to qualify for a home loan and mortgage rate can be problematic.
On a $300,000 loan with 15% down:
These are a few scenarios where a homebuyer's understandable overconfidence in their credit can lead to unwelcome news when they apply with a mortgage lender.
Still, some homebuyers have a FICO® Score that is higher than their VantageScore®, which could translate into the welcome surprise of more loan options and lower mortgage costs.
The survey asked 96 participants to report the difference in the VantageScore® from a popular online credit monitoring site and the score from Home.com's ScoreGeniustm, which uses the FICO® Score 4 model used by mortgage lenders. Both platforms are free and use a "soft pull," meaning there's is no harm to the users' credit scores. Home.com launched ScoreGeniustm in early 2022 as one of the first sites to offer consumers a better picture of their mortgage creditworthiness with a free soft pull of their FICO® Score.
Home.com is a multi-media resource for people looking to learn more about homeownership. Featuring news, articles, videos, and social media content, Home.com aims to educate prospective homebuyers before they embark on a major life decision. Home.com is owned by Fairway Independent Mortgage Corporation (NMLS #2289), a full-service mortgage lender with a wide array of products that help make homeownership more affordable. Based in Madison, Wisconsin, Fairway is dedicated to finding great mortgage options and providing some of the fastest turn times for its borrowers.
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