How to Find Mortgage Lenders That Use VantageScore

Buying a home can be an exciting part of a person's life. It represents a sense of accomplishment, and is also one of the biggest investments someone can make in their life. But it can also be a very scary process, because it can often be a long, drawn-out process. Some of the trepidation people have is whether they'll qualify for a mortgage.

A prospective home buyer with a limited credit history or past credit slip-ups can face difficulty finding a lender to obtain a mortgage. Lenders are frequently unwilling to take on the risk of approving borrowers who lack strong FICO scores, which require the regular use of credit and a track record of on-time payments. Fortunately for such borrowers, a new method to measure creditworthiness, known as VantageScore, has emerged to compete with FICO. The following tips can enable homebuyers to identify mortgage lenders that use VantageScore.

Key Takeaways

  • Vantage was developed by the three different credit rating agencies as an alternative to the FICO score.
  • The model requires less credit history to establish a score and is more forgiving with certain types of derogatory information.
  • People interested in using VantageScore to get a mortgage should ask lenders which model they use.
  • According to VantageScore, more than 2,200 lenders use the model to assess consumers' creditworthiness.
  • Brokers can also help steer mortgage applications to lenders who exclusively use VantageScore.

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 credit rating agencies: Equifax, Experian, and TransUnion. Using a different method than FICO, it requires less credit history to establish a score, and it 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
  • Available credit

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

VantageScore vs. FICO Score

FICO scores are the most widely used scores used by lenders to determine the creditworthiness of consumers. 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 FICO 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 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 U.S. banks.

VantageScore is embedded into some of the major platforms across the financial industry. It's the only scoring model embedded in the Consumer Financial Protection Bureau (CFPB) and the Nationwide Mortgage Licensing System & Registry.

Don't Put 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 credit being pulled. Submitting loan applications haphazardly as a way to land a hit can result in excessive credit inquiries, which can further depress a credit score.

Part of a 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 are weighted versus one another. Borrowers who want to be scored by VantageScore should glean this information from the loan officer up front.

Few lenders have abandoned the FICO scoring model completely.

Can I Use a Broker to Find a VantageScore Lender?

A mortgage broker is a good option for credit-challenged borrowers because brokers work with many lenders, all with different approval criteria. A good broker can look at a borrower's application and determine which lender in their portfolio best fits that borrower's needs. If a broker's portfolio of lenders is robust, it should include some that use VantageScore as a primary source of credit information. The borrower could ask the broker to steer their application in the direction of such lenders.

How Do VantageScore and FICO Score Differ?

Both FICO (Fair Isaac) and VantageScore are used to compute individual credit scores. The two scoring methods use different data sources and weight variables slightly differently. FICO scores require a credit history of at least six months, but VantageScores can be calculated for persons with a credit history that is less than six months old, allowing it to rate approximately 40 million more people than the FICO score.

Where Can I See My VantageScore for Free?

The free TransUnion and Equifax credit scores are based on the VantageScore 3.0 model. Free credit scores found on Credit Karma are also based on VantageScore. 

Article Sources

  1. VantageScore Solutions. "Why We Were Founded."

  2. VantageScore. "VantageScore 3.0," Page 1.

  3. Fair Isaac Corporation. "myFICO, What's in my FICO® Scores?"

  4. Fair Isaac Corporation. "What Is a FICO Score?"

  5. VantageScore. "How It Works." 

  6. Credit Karma. "Why Is the Score I Got From My Bank Different From the Scores I See on Credit Karma?"