Most Delaware home buyers are familiar with FICO - the traditional credit scoring model that is used by lenders to determine borrowing risk. FICO has dominated the credit scoring market for the past 20 years, but the new VantageScore system is gaining ground!

Per a recent CNN Money article, VantageScore is now used by 4 of the 5 top mortgage lenders in the country. VantageScore is also used by:

7 of the top 10 financial institutions
6 of the top 10 credit card issuers
4 of the top 10 car loan companies

VantageScores have been around awhile, but have been confusing because the scoring range was different than FICO. The latest version of VantageScore solves this.

Going forward, VantageScore and FICO will have a credit score range of 300 to 850, with 300 as the lowest score and 850 as the best possible score.

There are some differences in the scoring models that could benefit Delaware home buyers. VantageScores will count rent payments, utility bill payments and public records in their computations. This will provide credit scores for consumers with little or no borrowing history, who usually fall through the cracks with FICO.

Another big plus of VantageScore: collection accounts will not hurt your score if the balances are zero.

In other respects, the two scoring models are very similar - and neither one is going to tell you exactly how they come up with your score. Nor is your lender likely to tell you in advance which credit score company they will use in their lending decision. Lenders may use both FICO and VantageScore for a more complete picture of credit risk.

No matter what type of score is used by your lender, paying your obligations on time, and keeping your credit use to a minimum, will strengthen your score!

Understanding how credit scores work can help you get approved for a mortgage, and potentially save you thousands of dollars in mortgage interest. For a complete overview of the home buying process, including how to qualify for a mortgage, join us at our FREE first-time home buyer seminars! The next one is in Newark on April 20, 2013! Register here to save your seat!

Always feel welcome to contact me for more information about homes for sale in Wilmington and Newark! I am here to help you with your home ownership goals!

Katina Geralis
Wilmington, DE Real Estate Expert
Keller Williams Realty
Wilmington Real Estate
Wilmington Homes for Sale
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