Credit Bureaus Offer Alternatives; Score Will Affect Your Florida Home Loan

So, you want a Floria home loan? The type you’re qualified for will largely depend on your credit report. It’s important too have a clear idea where you stand.

With this in mind, the three national credit bureaus have developed a rival to the well-known FICO credit score. The credit bureaus say their scoring model will be easier for consumers to understand and will offer more consistent scores. But it’s too soon to say whether lenders will embrace it.

“It’s the most sophisticated, highly predictive scoring model that’s available in the marketplace,” says Donald Girard, spokesman for credit-reporting giant Experian.

Know your credit to qualify for a Florida home loan. Here’s how.

The product, called VantageScore, is the result of a joint venture of Equifax, Experian and TransUnion, the three national credit bureaus. Representatives from the three companies say VantageScore will have an intuitive scale - from a low of 501 (reflecting absolutely horrible credit history) to 990 (the credit equivalent of getting straight A’s from kindergarten through college).

Furthermore, VantageScore scores will be calculated the same way for each credit bureau or lender, the representatives say. If your VantageScore from Experian is 850, it will be 850 from Equifax and TransUnion as well, as long as they’re basing the score on exactly the same information.

That’s not always the case with FICO scores, because credit bureaus and Florida home loan lenders use slightly different scoring formulas and even different scales - some top out around 850, while others top out around 900. They also have different data to base those scores on.

Is there potential for confusion?

The result of a poor rating often forces applicants to look into unusual Florida home loans, such as lease-option financing. These don’t always work out so well, hence the importance of having a strong idea of your score.

Unfortunately, the competing credit-scoring models could confuse consumers. A FICO score of 780 means you have good credit — the equivalent of getting an A or A-minus in school and worth a low rate on a loan. On the other hand, a VantageScore of 780 would be merely fair — the equivalent of getting a C. You might be turned down for a Florida home loan loan or have to pay a higher mortgage rate.

Businesses can buy VantageScores right now, but the scores won’t be available to consumers until later this year, and the price is undisclosed.

In contrast, consumers have been able to buy their FICO scores for three or four years now via myFICO.com. That service is operated by Fair Isaac Corp., developer of FICO scores. Fair Isaac will sell you your credit score (plus a credit report) from one of the three credit bureaus for $14.95.

Advantages of new credit scoring model

In announcing the new credit-scoring model, representatives for Equifax, Experian and TransUnion are careful not to denigrate FICO scores and are reluctant to discuss Fair Isaac at all. But they imply that VantageScore is better because it will do away with those 100-point disparities.

Equifax’s spokesman, David Rubinger said:

“Essentially, for an individual’s credit score, the only variance in the score will now depend on what is the data in the file itself, as opposed to it being a difference in the methodology in how the score is being crafted.”

Colleen Tunney, spokeswoman for TransUnion, touts VantageScore’s consistency. She acknowledges, though, that each credit bureau has a different set of data for each consumer, so scores still will vary. Just not as much as they do now.

What should you take out of this news? Before taking out a Florida home loan, just be sure to check on your credit rating.