Same borrower. Same credit history. Two different credit scores. The credit score model your lender uses can affect your monthly payments and upfront cost. Here’s how it works, and how one local family came out ahead.
What is a credit score?
A credit score is a risk rating that helps determine how likely you are to pay your home loan back on time and in full. It’s calculated from the information in your credit reports, including but not limited to:
If you pay debts on time
How much of your available credit you use
How long you have had credit
How often you apply for new accounts
Your credit score affects different factors, like:
Whether you qualify; do you meet the minimum requirement
Your interest rate; lower scores may increase your rate
Upfront pricing adjustments; fees based on your score and down payment
Your mortgage insurance (PMI) cost: the higher the score, the lower your PMI
In short, a higher score means lower risk in the lender’s eyes, and lower risk means a better deal for you.
What is a VantageScore?
VantageScore was created in 2006 with its own scoring formula. It can score people with thinner credit files, requiring as little as one month of credit history. It also considers things like rent and utility payments. Newer versions, like VantageScore 4.0, also look at trended data, meaning how your balances and payments have moved over time, not just where they stand today.
What is a FICO score?
The FICO credit score model was created in 1989. For nearly three decades, the mortgage industry has treated the FICO model as the only credit score that counts. FICO needs a credit account at least six months old, plus recent account activity, before it will produce a score. It doesn’t take things like rent and utility payments into account.
A True Local Story
Recently, a family from DeForest came to us to finance a new home. The purchase price was $499,900, and they planned to put $50,000 down.
Their FICO score was 696, but their VantageScore was 728.
That 32-point difference mattered. Because we were able to use their VantageScore, the family saved:
$2,249.55 upfront, thanks to lower credit score cost adjustments
$71.24 every month in mortgage insurance (PMI), thanks to the better credit score
Same family, same house, same finances. The only thing that changed was the score we could use.
The Takeaway
Not every borrower will see a higher VantageScore, but when it works in your favor, the savings are real. Knowing which options exist and how to use them to your advantage is a unique way Stampfli Mortgage saves you money.
Not all lenders are using the VantageScore model yet. As mortgage brokers, we use lenders that use VantageScore when it benefits homeowners. It’s another way we give our clients a competitive edge.
Thinking about buying or refinancing? Contact Stampfli Mortgage, and let us review your options.