You may not just have one credit score

For most of my adult life, we have talked about credit scores as if everyone has one. “What’s your credit score?” “Mine is 720.” “I need to get mine above 700 before I buy a house.” It turns out that may be an overly simplistic way to think about credit, particularly when applying for a mortgage. A change taking place at Fannie Mae and Freddie Mac is giving mortgage lenders another way to evaluate a borrower’s credit. And for some borrowers, it could affect whether they qualify for a loan and how much that loan ultimately costs. The important part for consumers is actually pretty simple: You may not have just one meaningful credit score anymore. Same borrower, different score For decades, Fannie Mae and Freddie Mac have relied on what lenders generally call Classic FICO when they submit loans. That is changing. The Federal Housing Finance Agency approved newer credit-scoring models, and Fannie Mae and Freddie Mac are now allowing lenders to use VantageScore 4.0 as an alternative to Classic FICO for eligible loans. Fannie Mae expanded that option to all of its approved lenders in September. Why does that matter? Because Classic FICO and VantageScore 4.0 don’t necessarily look at the...