Which Credit Score Matters for a Mortgage?

While there are many credit scoring models out there, most mortgage lenders use the FICO® credit score model. According to the Federal Housing Finance Agency (FHFA),​ since 2015, FHFA, Fannie Mae, and Freddie Mac (the Enterprises) have been evaluating the potential impact of updating the Enterprises’ credit score requirement from Classic FICO to Classic FICO, FICO 9, and VantageScore 3.0. However, on July 23, 2018, FHFA announced that the Agency would not make a decision in 2018 about updating the credit score model used by the Enterprises, such as Fannie Mae and Freddie Mac.

What are the two major credit models used by lenders, landlords, and credit card issuers?

FICO® vs. VantageScore® are the two most widely used credit models.
Both FICO and VantageScore use similar criteria to measure your creditworthiness. However, the way they process and report your information is different to determine how risky you are as a borrower.

So what’s the difference between FICO® vs. VantageScore®?

A significant difference between FICO® and VantageScore® is how they weigh credit history and the period for reported accounts. VantageScore® allows for a shorter credit history enabling you to establish a credit score in a shorter period.

How is my FICO® Score calculated?

Your Credit Scores are calculated based on different categories that can be different based on the credit model used.

FICO® Scores are calculated using many different pieces of credit data in your credit report. The data is divided into five categories:

  • Payment history (35%)
  • Amounts owed (30%)
  • Length of credit history (15%)
  • New credit (10%)
  • Credit mix (10%)

” How Credit History Impacts Your Credit Score” | myFICO. https://www.myfico.com/credit-education/whats-in-your-credit-score/

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