Mortgage lenders have long used three key FICO scores — 2, 4 and 5 — to determine home loan eligibility. Now, there are a couple of new score models on the block that could make it easier for people with certain types of debt or limited credit history to get a mortgage.
Lenders can now use VantageScore 4.0 to determine eligibility for any Federal Housing Administration (FHA)-insured loan and any Freddie Mac and Fannie Mae loan, according to a statement from the Trump administration last week. Soon, lenders will be able to use FICO 10T as well, which is calculated similarly. The move is part of a multi-year effort under the Credit Score Competition Act, signed by President Donald Trump in 2018.
The adoption of these newer score models changes the mortgage application process by making it easier for some applicants with certain financial histories to get a mortgage.
Unlike classic FICO scores, both Vantage 4.0 and FICO 10T include rent and utilities in the payment history — making it easier for those who don’t have loans or a credit card to build credit. The two new scores also weigh medical debt and paid collection accounts differently than classic FICO scores, which could make it easier for someone with an unpaid medical bill or a history of collections resolved years earlier to qualify for a loan.
“Expanding the set of acceptable credit scoring models to include VantageScore 4.0 and FICO 10T will help foster a more transparent and dynamic market, broaden access to sustainable credit, and put downward pressure on costs,” for these two types of loans, Mortgage Bankers Association President and CEO Bob Broeksmit said in a statement about the change.
If you’re thinking about applying for a mortgage in the future, here are a few tools you can use to view these two scores.
Where can I view my VantageScore 4.0 score?
VantageScore 4.0 is harder for customers to find than older models, like VantageScore 3.0.
However, Synchrony Bank — which issues over 100 store cards and credit cards — offers its customers a free look at their VantageScore 4.0, according to VantageScore. Synchrony provides monthly score updates, so you’ll be able to see the most up-to-date information.
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Where can I view my FICO 10T score?
You can view your FICO 10T score with myFICO through myFICO Basic (free), myFICO Advanced ($29.95 each month) and myFICO Premier ($39.95 each month), FICO confirmed to CNBC Select.
FICO® Basic, Advanced and Premier
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Cost
$29.95 to $39.95 per month
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Credit bureaus monitored
Experian for Basic plan or Experian, Equifax and TransUnion forAdvanced and Premier plans
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Credit scoring model used
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Dark web scan
Yes, forAdvanced and Premier plans
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Identity insurance
The two paid options provide a snapshot of your score with data from all three credit reporting bureaus (Experian, TransUnion and Equifax), while the free option gives you a score based solely on Experian’s data.
On top of that, myFICO offers a FICO score simulator that allows you to see how certain actions can change your score — and information on how you can improve your score, a feature we love here at CNBC Select. The Premier option comes with a simulator for mortgage scores as well.
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