Most mortgage lenders and banks rely on your three-digit FICO score, a credit score that shows how wisely you've managed your money in the past, when determining if you qualify for a home loan. They also use this score in deciding how high of an interest rate to charge you. In 2006, though, the FICO score received some competition in the form of the VantageScore, an alternate credit score created by the three national credit bureaus, TransUnion, Experian and Equifax. Your VantageScore may actually be higher than your FICO score, which would mean that you'd qualify for a better interest rate if your lender would use that model instead of the more established FICO. Persuading lenders to rely on the newer score, though, isn't easy.
Order your FICO scores from the three national credit bureaus, as they will all vary slightly. This isn't free: For example, TransUnion charges $14.95 for a FICO score. If your FICO scores are low, under 620, you may struggle to qualify for a mortgage loan with most traditional lenders. If they are at 720 or above, you'll generally qualify for the lowest interest rates. You can order your FICO score through each bureau's website.
Call a mortgage lender--you can shop around at as many as you'd like--and explain that you are interested in purchasing a home, but that your FICO score is low. Explain that you'd like to compare your FICO score with your VantageScore. You'll need your lender to order this score on your behalf; consumers are not able to purchase their VantageScore from the three bureaus.
Compare your VantageScore and FICO score to determine which is higher. If your VantageScore is higher than your FICO--it relies on a different method to determine the creditworthiness of borrowers--than you should ask your lender if its underwriters would consider relying on the VantageScore instead of the more traditional FICO score when determining whether your credit is good enough to qualify for a mortgage loan and for the lowest interest rates.
Call other lenders if your first choice of a mortgage lender or bank won't work with the VantageScore. It might be difficult to find a lender willing to work solely with your VantageScore: Most still rely on the more established FICO. However, you might find a lender that is willing to use your higher VantageScore as a mitigating factor; it won't replace your FICO score but will supplement it, something that might help you qualify for a lower interest rate.
Much like with your FICO score, you can improve your VantageScore by starting a new history of paying your bills on time and cutting down on your revolving debt. It might make more financial sense to wait until your credit scores--either FICO or VantageScore--improve before applying for a mortgage loan.
Things You'll Need
Computer with Internet connection