Home.com Study Shows Popular Free Credit Score Is Inflated by 20 Points On Average

Relying on an inflated VantageScore® can lead to thousands in unexpected closing costs on a home loan

Homebuyers can get their FICO® Score for free using Home.com's ScoreGeniustm

MADISON, Wis., May 16, 2022 /PRNewswire/ -- A new study by Home.com revealed VantageScores® from a popular online credit monitoring service were 20 points higher on average than FICO® Scores used by lenders. Home.com's new service ScoreGeniustm shows consumers FICO® Scores, helping consumers avoid thousands of dollars in unexpected closing costs on a home loan.

Read the full study summary here.

FICO vs Vantage credit scores
FICO® and Vantage are competing brands that produce consumer credit scores used to measure the trustworthiness of a borrower to repay a loan. Although credit monitoring sites often show VantageScores®, mortgage lenders almost exclusively use FICO® Scores to determine loan eligibility and costs.

Study findings
The Home.com study asked volunteer participants to compare their VantageScore® from a well-known credit monitoring site to their FICO® Score from Home.com's ScoreGeniustm.

Fifty-four percent of participants had a VantageScore® that was higher than their FICO® Score. Within this group:

• The VantageScore® was 20 points higher on average
• The greatest difference was 73 points
• Seventeen percent had a VantageScore® 35 or more points higher than their FICO® Score

How credit score affects mortgage costs
Since FICO® Scores are the gold standard in the mortgage industry, counting on an inflated VantageScore® to qualify for a home loan and mortgage rate can be problematic.

On a $300,000 loan with 15% down:

• A 20-point difference between a 680 and 660 score could mean either $3,750 in extra closing costs or an approximate $70-per-month increase to the monthly mortgage payment based on Fannie Mae's Loan Level Price Adjustment matrix.
• A 73-point difference between a 720 and 647 credit score could mean an additional $8,250 in closing costs or approximately $140 per month on the mortgage payment.
• A 73-point difference between a credit score of 651 and 578 could mean the difference between qualifying for multiple loan programs and being denied the loan altogether.

These are a few scenarios where a homebuyer's understandable overconfidence in their credit can lead to unwelcome news when they apply with a mortgage lender.

Still, some homebuyers have a FICO® Score that is higher than their VantageScore®, which could translate into the welcome surprise of more loan options and lower mortgage costs.

The survey asked 96 participants to report the difference in the VantageScore® from a popular online credit monitoring site and the score from Home.com's ScoreGeniustm, which uses the FICO® Score 4 model used by mortgage lenders. Both platforms are free and use a "soft pull," meaning there's is no harm to the users' credit scores. Home.com launched ScoreGeniustm in early 2022 as one of the first sites to offer consumers a better picture of their mortgage creditworthiness with a free soft pull of their FICO® Score.

Check your FICO® Score for free on ScoreGeniustm.

About Home.com

Home.com is a multi-media resource for people looking to learn more about homeownership. Featuring news, articles, videos, and social media content, Home.com aims to educate prospective homebuyers before they embark on a major life decision. Home.com is owned by Fairway Independent Mortgage Corporation (NMLS #2289), a full-service mortgage lender with a wide array of products that help make homeownership more affordable. Based in Madison, Wisconsin, Fairway is dedicated to finding great mortgage options and providing some of the fastest turn times for its borrowers. 

SOURCE Home.com