Credit Score

There's a new article on CNN Money the talks about the different types of credit scores available to tell you how good you've been or how bad you've screwed up.

There's the FICO (Fair Isaac Corporation), which everyone should know about by now. This is the one most lenders still use to gauge your credit worthiness. The FICO score ranges from 300-850, if you have a FICO above 700 your pretty much in the driver's seat when it comes time to borrow money. Banks will compete for your loan instead of you having to apply and "see how much they'll give me" or "hope I get approved."

Apparently the FICO is not the only credit score available. VantageScore was created by the 3 major credit bureaus (Transunion, Equifax, and Experian) to compete with the FICO. Then you have Transunion's TruCredit score and Experian's PLUS. I think this second set is just another way for these companies to get money out of you. Banks and other lending institutions will generally use FICO and a mix of income/assets to decide if they want to give you the "privilege" of borrowing money from them. I would stick with the FICO as your main indicator and would stay away from these other scores unless your lender specifies that they will be using VantageScore to give base your interest rate.

In the end, you know before you even get your score what your credit is like. If you have a bunch of collection accounts (I was a victim and worked hard to get most of them off, check out the links to help with Bad Debt on the right of the page), late payments on credit cards, have $500 of available credit of which you've already used $450,and have changed jobs 4 times in the last year...don't be shocked when you see a 490 credit score or even lower. You know you messed up, don't blame everybody else. Bad credit only hurts you and your family, the banks will alwys get more customer and more loans, they don't really need you. Take responsibility and get to fixin' your credit and gettin' your money together, make them want you.

People always say "pay you bills on time to bring up your credit score." Truth is, Con Edison does not report to the credit bureaus, neither do Sprint/Nextell or Optimum Cable Services. It is definitely a good habit to get into, you don't want to get behind on any bills as that may get you into a downward spiral towards more debt, that would be the opposite of financial security. But your credit score is based on just that, your credit. Available credit, credit utilization, credit inquires, length of credit history, and number of delinquent accounts are all factors used when getting your credit score. Keep these in check, and your credit should be fine.

There is plenty of information available at MyFico and a bunch of other websites on how your score is calculated and different ways to improve it. Like I said, I would stick to using FICO until these other scores are more accepted or if the application states which score they will be using. The bank will not want to hear your great VantageScore if your FICO does not meet their standards.

Thanks for reading

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  1. CreditAnalyzer said...

    I've had a credit card for quite a time already but I still cannot know all the peculiarities on credit score calculating. They take in to account many things. But one thing I know for sure, avoid hard inquiries, it brought down my scores. And of course late payments are the woest thing for your credit score.  

  2. Rad said...

    It's hard to avoid all hard inquiries, but your right in that you should limit them to as few as you possibly can. Keep your balances low and pay the credit cards on time, even if it's the minimum. This should give you a decent score. Available credit, inquiries, length of history are factors that raise your score even higher.

    Thanks for the comment man  

  3. Anonymous said...

    I hope this article helps your clients who need to quickly raise their credit scores for the loan approval process or for the best possible interest rates.

    How Credit Expert Frank Bruno Raised His Credit Score 40 Points in 24hrs.

    Also your clients may be interested in watching Free Credit Tip Videos here  

  4. Credit Repair said...

    great post, it really helped me alot…gives me alot of information… thanks…. nice job…
    Self Credit Repair | Bad Credit Repair Report  

  5. Same day payday loan said...

    Credit score shows that how much your finances are strong and how well u have handled the situation.  

  6. jerry john said...

    do not start increasing your normal expenses just because you can. In 6 months your credit score will be better, you will be less risky and you will be offered better conditions when required, for example in case of new findings or others that will be explained further. free credit reports


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