I would sell you the book, if it existed. The problem is that it would probably be obsolete before you could finish reading it. Well, maybe not completely obsolete, but things have changed in the mortgage industry since last spring.
We used to get daily rate sheets showing the interest rates for various lenders under all their programs. Last year we were getting daily rule change notices. It was pretty hectic trying to keep a loan together while it was being processed and the rules were constantly changing. Now the rules have pretty much stabilized.
I don't know of a single lender who uses Vantage.
The three big bureaus that Sera mentioned offer scoring models with different names. Experian uses the Fair-Isaac (FICO) model, Equifax uses the Beacon model, and TransUnion uses the Empirica model. All of these models have variations as well, like Fair Isaac 1, Fair Isaac 2, Beacon 5.0, Empirica 95, Empirica 04, Empirica 98, etc.
Scoring models take the data on file for what happened when, for what amount on what type of credit account, and crunches that data into a score, usually between 350 and 830. Most models weight things that happened recently far greater than something that happened 2 years ago. Housing-related issues, like utility collections or rent liens or mortgage lates are weighted differently from credit cards. The number of accounts is a factor, the amount of credit utilized out of a maximum authorized is a factor, the lateness if any of payments is a factor and so on. There are just a lot of ways of looking at the same data. Most of the 3 bureaus have the exact same data, (but some have additional reported problems from the others).
As to which model is used, lenders have different methods, but the vast majority look at whatever score is between the other 2 and use that 'middle' score to determine your basic eligibility. The other two scores are not normally thrown away, and any issues reported from those bureaus may be examined by the underwriter.
So, to answer your question about FICO -- only Experian actually reports it, but the others have equivalent models, and they can also calculate the FICO. They're normally reporting Beacon and Empirica. The Fair-Isaac model treats the data a particular way, which is different from Beacon and Empirica. Vantage is a whole different animal, not used by lenders. We wouldn't be able to equate the scoring model of Vantage to FICO, since every bit of data is weighted differently -- we'd have to know the data points, too, and the model would have to be public. The models are trade secrets and protected from disclosure by law.
If you want your real scores that would be used by a lender, ask a loan officer to pull them for you. Most will not charge you for this, even though they must pay for each pull.
Q1 - Now that you realize the 'middle' score is used and it must be above 620 for most lenders -- this is often the minimum -- there are lenders who will not look at the number, but rather make a judgment based on your data points (individual reports from all your creditors). FHA, VA and USDA actually don't refer to numbers, only the lenders who get those guarantees from those agencies actually impose credit score limits.
Q2 - None of the 3 major or the 1 less well known bureaus has any more weight than the others.
Yes, it would take a book to describe all the subtleties in credit scoring, but these are the basics.
Be aware that a score below 640 but above 620 can actually cost a higher interest rate than a higher score. Here we're talking middle scores. Some lenders place a penalty on the rate when the score is above the minimum but not by much. This is typical for FHA lenders.
On the other hand, conventional lenders are even more strict, and generally any middle score below 680 takes a hit. The private mortgage insurance also takes a hit, i.e. it's higher the lower your score. If your score is low, you might also find the lender requires a higher down payment to reduce his risk.
In this little space we can't possibly write down all the interactions and caveats.
If you want to shop, ask your loan officer to pull your credit and ask him what the rates are. Ask him for a copy so you can see what's on your credit report. If you have problems, months before getting a loan is when to fix those problems, not 30 days before closing. Sometimes problems can be fixed quickly (in less than 30 days) but it does cost extra and is stressful for the borrower who just didn't know about it beforehand and now has to pay money to clear an account. This is the case when you don't have time to argue with the creditor about what happened -- you just have to pay them off.
I hope all this helps. If you have specific things you'd like to know, just send me an email.
I'm a mortgage loan officer who works with first time home buyers. My job is to prequalify potential buyers for realtors and to help with the explanation of the mortgage process. When I pull credit, it is pulled from the 3 credit bureaus, Transunion, Experian, and Equifax, which reports a number score. The lowest and the highest numbers are discarded and the middle score of the three is your FICO score. My lenders use my credit report and do not use the Vantage scoring system. Neither credit bureau carries more weight, its what is reported on the credit report that we look at. I do have a few lenders that will take less than 620 if it is FHA or VA loan. What you pulled was a credit report for the consumer and not for a mortgage. I would be willing to help you with the process and walk you through it. You may either call me at 214-405-7264 or email me at email@example.com. I work with clients throughtout the state of Texas and only Texas. I am available to talk and work with you at your convience, even on Saturdays.
Instead of buying a book, you need a Realtor! A Realtor will help you choose the right lender for your needs. These questions that you are asking are better suited for a lender to answer. But why just trust any lender? Choose a Realtor that you trust and trust her/him to take care of you with quality referrals. You have a lot of questions, and you should. This is a big purchase! But especially since you are a first time buyer, you need to make sure that you are covering all the basis. It is my experience that the hardest thing for a Buyer to do is talk to a lender. It really is a 15 minute phone call and if you decide you don't like that lender, you will choose another one. You should always be able to have a consultation with a lender without paying anything. There are lenders on the internet and TV that seem great but I caution you on choosing them.
To answer your question: It is my experience that a lender will choose the middle FICO score and if you have over 620, you should be able to get a loan. Your time is limited to look, choose, and get closed before the $8000 tax credit time limit. One lender I like is http://www.innovativemtg.com. They have lots of answers on their site plus you can even do live chat.
Hope this helps, Mark. You can email me if you have more questions at firstname.lastname@example.org.
Lenders use all three bureaus.... there is no weighting.
The free e-book I have linked below is about credit.