Forget About FICO Scores for NMLS-Think Vantage Score Instead

Wirtten my Jim Hogel, staff writer for

Most of us in the mortgage and real estate business are pretty familiar with FICO and its scoring models.  FICO scoring algorithm is used by Experian, Equifax and TransUnion and has been for years. Mortgage FICO scores range from 300-850.

The issue today is NMLS is requiring you to pull your score from Trans Union and it will be a Vantage Score.  (A What?)

So what’s the big deal you might ask? Well for one the scoring model range is from 501-950.  So when you get your score how will you know if a 640 is ok, or a 720? Or will an 820 be the norm?

What You Need To Know About the Vantage Credit Scores

Here is some background information to help us all out. Vantage Score is the creation of a new scoring model developed by Experian, Equifax and TransUnion in 2006. Why would they do this? Simple, they are tired of paying FICO licensing fees to use their algorithm.

In fact FICO sued Vantage Score Solutions and the three credit bureaus (and you thought they were all friends) and FICO lost.  (Now they both have to play in the same sandbox)

FICO still holds about 74% of the credit scoring market, while Vantage Score has captured about 6% since 2006 when it was introduced. After FICO lost they announced they were raising their prices to pull FICO scores through (hey you have to make up for that lost profit right?) So overall Vantage Score has a small piece of the pie.

Here is the Vantage Score claim to fame.  Their model uses a single algorithm at each bureau, which can translate to better score consistency when consumers pull their Vantage Score credit ratings. They claim the Vantage Score model showed an 8 percent increase in credit scores for 10 million consumers after doing a random score check.

Currently, only TransUnion and Experian sell the Vantage Score to consumers for $7.95. Equifax and TransUnion sell FICO scores.

Vantage Score is a new credit score that was developed jointly in March 2006 by the three national credit reporting agencies- Experian, Equifax, and TransUnion. This new credit scoring system has been developed to simplify and standardize scores across the three bureaus. Today, customers find that scores from each of the credit bureaus can vary widely. However, this new credit scoring system tries to reduce these variations, and help the lenders assess their customers in a more consistent way. Consumers can get their Vantage Score through any of the three major bureaus; all of these bureaus use the same scoring algorithm for calculating the Vantage Score.

What is the significance of Vantage Score?

The vantage score ranges from 501 to 990 and at the same time assigns a letter grade ranging from A to F to specify each range. Given below is a set of different score range of Vantage Score and their corresponding grades.

Score Range Grade Comments
901-990 A (Super Prime) Applicants who fall in this range are considered by most creditors, issuers and lenders as the most creditworthy borrowers. Thus a borrower in this category will get best rates and terms on a loan from creditors.
801-900 B (Prime Plus) Borrowers in this category get “good” rates and better terms from creditors. Most of the lenders view the consumers falling into this category as creditworthy.
701-800 C (Prime) Usually lenders offer reasonable rates to the applicants within this score range. However, some lenders may wish to analyze in depth the credit history of consumers in this category in detail and may need additional documentation in order to extend favorable terms.
601-700 D (Non Prime) Consumers in this category will have lot of trouble in getting loans by the creditors. However, a borrower belonging to the non prime range can get credit on less favorable terms from lenders.
501-600 E (High Risk) Many lenders generally prefer to turn down the application form submitted by the applicants belonging to the high risk range. Others may offer credit but will require deposit accounts to protect the loan.

What affects your Vantage Score?

Vantage Score is calculated on the basis of six factors. Each factor plays a vital role in evaluating your Vantage Score; however these factors do not have equal weightage. Given below are the six factors with their approximate percentages:

  • Payment history (32%) – Your payment history basically shows how regularly you’ve paid your debts.
  • Utilization of available credit (23%) – The amount you are using from your available credit.
  • Credit balances (15%) – The total amount of debt that owe to the lenders and creditors.
  • Length of credit history and types of credit (15%) – It includes the duration of your credit history and the types of credit you have.
  • Recently opened credit accounts (10%) – The number of credit inquiries you have made and the currently opened credit accounts.
  • Available credit (7%) – The total amount of credit available with you

So Why Would NMLS Use Vantage Score Instead of FICO – a Score We Are All Used To?

Well take heart the scores may not be as big an issue as we all think. What have we heard from those who have already had their credit pulled? They are looking at the background check (make sure it’s clean) and then for negative items like open collections, judgments, tax liens, bankruptcies on your report.

And here is the bottom line, the states are requesting that you write letters of explanation for any or all of the negative items paid or unpaid.  So be ready to document what happened, why and when. Each state then has the option to terminate, suspend or put you on probation.  We are hearing all kinds of stories from you and on the blogs, so please pass the information about what you are experiencing,  back to us.  Check with your State’s Licensing Board to see what “vantage credit score” they will be using to “grade” you!

NMLS and mandatory credit pulls, it has a purpose and we all understand that. But maybe with current market conditions you could show some grace on how you handle what you are about to see.  If the credit pull has the power to give you a “thumbs up or down” in the profession you love, they should have pulled it before you spent the money on the training and new tests.  I will go out on a limb and guess the loan professionals that have survived this economic housing meltdown, stayed in the business, taken the tests and passed are not fraudulent criminals that were in the business in its heyday.

So get ready, get a copy of your report and preview it (hidden link)

Heads Up Licensed LO’s – You’ll Need NMLS Credit Authorization starting 11-1-10

NMLS Requiring Your Credit Report Authorization – November 1, 2010. 

 One of the provisions of the National Mortgage Licensing System is that loan officers must be “financially responsible”.  At the time, everyone wondered what the heck that meant?

 Well, you knew it was going to happen.   The NMLS has announced that beginning on November 1st, 2010, all licensed loan officers (not registered) must authorize them to pull a credit report on YOU—regardless of what your state’s requirements—and even if your credit was previously reviewed. 

 If you will be applying for a license in the future, you must authorize the credit report pull as the time you apply.

 Here’s how it will work:

 You’ll have to log in your NMLS account.

 You will be asked some questions to prove our identity. These are personal questions so your company will NOT be able to answer them for you.  Questions that might be asked would be previous addresses, balances on loans, current or previous phone numbers—things that only you would know.

The fee is $15.

 The report will be considered “soft pull”; it will be thru TransUnion, using Vantage Score® and will be a singe report.  (Hint, pull your own TransUnion report and see exactly what you will need to do to fix any errors.)

 The NMLS will NOT be pulling the credit report.  They are serving as your state’s clearinghouse and it will be your state who will access the NLMS database and randomly pull a credit report.

 There are a handful of states, whose rules state that they will be pulling a report by the end of 2010.  The rest of the states will be between January and March, 2011.

 And, you won’t know when your credit will be checked—it could be a year from now.

 It also means that you are giving them the authority to pull a credit report for years to come.

 More info will be posted in the November 10th issue of  At the NMLS website

In addition, the “state agency checklist”  was updated on October 15, 2010.