Content is King. Why Different Scoring Models Create Confusion for Buyers

If you've been reading the news recently, you've noticed headlines like "A Fight Over the Credit Score Lenders Use for Your Mortgage" or "Senate to consider bill to end FICO monopoly at Fannie Mae and Freddie Mac"

All of this is in response to a legislative push to introduce a competing scoring model, The VantageScore, into mortgage lending. Since 1995, FICO (Fair Isaac Corporation) has been the dominant player in scoring models, even being compared to as a credit score monopoly

Unfortunately, the confusion surrounding competing credit scores is leaving consumers in a confusing position. Some of the most frustrating questions start when a consumer checks their credit score from a site like Credit Karma, then goes to their mortgage lender to complete a mortgage application.

The result?  

For the majority of consumers, there's a dramatic discrepancy between their VantageScore and their FICO score. Realtors and mortgage professionals across the country grapple with how to answer this very frustrating question:

"Why is my credit score different with a mortgage lender?"

When I work with mortgage or real estate professionals, this is one of the most common questions that I get asked. Unfortunately, the answer leaves most consumers more frustrated than when they began. Consumers are often left asking themselves what a "real" credit score is. In 2011, FICO sued Experian over their claim that their scoring model produced a "real" credit score. The courts agreed with Experian, ultimately propelling the competition between the two scoring models,  FICO and The VantageScore, onto the national stage. 

My advice to real estate professionals is to avoid getting caught up in explaining the technicalities of scoring models. At the end of the day, content is king. No matter what scoring model you use, having an accurate and healthy credit profile will dictate a strong credit score. In order to build and maintain a healthy credit profile, consumers need to stay vigilant about checking their credit profiles, and challenging any accounts that may be inaccurate, unverifiable, misleading, or outdated. 

If you run into this questions often, be prepared and encourage your clients to review the content on their credit reports first before comparing the credit scores between lenders. Often times we find discrepancies on credit profiles that are hampering the buyer's ability to credit qualify at a high level. Here are a few resources to make sure you're prepared to deal with this situation:

Credit Reports:

Information on Credit Scores:

Check out our podcast to learn more on this subject:


Alex Grimnes