Things are changing and they are changing fast. There is a new scoring system coming around the corner. Whether you like it or not things are shifting and you need to start acting. The three major credit bureaus have teamed up to create a 4th credit bureau named Vantage score.
Don’t let the name fool you, the Vantage scoring system could quickly become a disadvantage to unexpected consumers, soon. I can only imagine the curve ball this is going to have on the average consumer. Over the past 5 years, I have seen firsthand the lack of knowledge of the current FICO system. Delaying any further action could cost you more in the long run.
Watching the rolling out of a new way to score people, only makes my stomach turn. But hey, just like everything in life, one must adapt to their environment. So, let’s face it, we must learn one day. Let’s start now!
FICO SCORE
- Take two people who both are using 50 percent of the spending limit on their credit cards. Both borrowers would be hurt by that high card utilization, since lenders typically like to see that consumers are using less than 30 percent of the credit they have available.
- Your payment history, also known as payment performance, is the record you’ve established by either paying or not paying your bills on time and it’s the most important factor among major credit scores, accounting for about 35% of most models. A positive payment history reflects that you’ve paid all your loans back on-time and as agreed.
- Buying real estate in the near future? Don’t sweat it most mortgages only pull FICO scores, so home buying is still the same.
VANTAGE SCORE
- One person might look better if his report shows that he has been paying down debt and using less of his total credit vs one who has been piling on more debt would be viewed as risky even if you paid it down right before applying.
- People who have generally good credit scores but may temporarily have more debt because of a major purchase, will not see as dramatic of score change vs on their FICO they would.
- People pulling credit scores for other reasons, such as when they are applying for an apartment, opening a credit card or applying for an auto loan, may be able to use the new scoring system. Which could be beneficial if you have an eviction on your FICO report.
GET YOUR OFFICIAL VANTAGE SCORE
About 8 billion Vantage Score credit scores were used between July 2015 and June 2016, up 40 percent from the year before. To sum it up, with your FICO score there are a few legal loop holes that could give your score that extra boost right before applying. The Vantage Score not so much. They are grading you over a time, not just what your profile may looks like when they pull your Vantage Score. The resources currently available might not always be there. Therefore, waiting to take care of your finances is not recommended. Visit Financial ID for assistance on taking the first step to your financial freedom.
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