What to Know About Credit Monitoring vs. Your Qualifying Score

Financial planning apps, home search tools, and affordability calculators have done great things by helping buyers start their journey more focused and prepared. However, there is a downside… Some buyers are ruling themselves out of qualifying for a mortgage based on estimates and generalities gained from these apps. We’re zeroing in on credit, and how the score in an app doesn’t tell the whole story. 

FICO® vs. Vantage

Credit scores vary with the scoring model being used. The mass majority of lenders make credit decisions based on a person’s FICO® score. The leading consumer credit monitoring app, on the other hand, uses the VantageScore model. Other consumer apps use scoring models that are used so infrequently by lenders that they are referred to as “educational credit scores.”  Here’s how it affects buyers.   

Factors + Score 

Not only does the scoring range differ between models but the factors that determine the score do too. For example, length of credit history makes up 15% of a FICO® score, and amounts owed make up 30%. Conversely, the length of credit history is “highly influential” in a VantageScore, and amounts owed are “moderately influential.” So, if someone were to pay down a debt, their FICO® score would improve more significantly than the improvement reflected in their app. 

Keep an Open Mind

At the end of the day, buyers who self-monitor their credit scores are doing a great job of staying informed but aren’t using the most reliable way to determine if and what they qualify for. If you have concerns that you may have to wait a little bit to improve your credit or are hesitant because you may only qualify for certain loan programs, reach out. You may have a pleasant surprise waiting and will always walk away from a conversation with our mortgage bankers with personalized advice.