Why Your Vantage Score Is Just As Important As Your FICO Score

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Everyone is pretty familiar with what a FICO credit score is. But there’s a new credit scoring agency in town, and in the next few years it may replace the FICO score all together.

What most people don’t understand is that there are many agencies who produce credit scores. FICO is just the most popular one used. But in the past several years, lenders have been using a consumer’s VantageScore to determine credit worthiness.

VantageScore is a relatively new credit scoring agency designed to give more choice in the marketplace. VantageScore is growing in popularity mainly due to its simplified scoring method.

For consumers with weak credit history, this may be a good thing. This company looks back at the past 24 months of a person’s credit history, while FICO may go back decades. This is useful for a borrower who may have had derogatory marks made years ago. This is also perfect for someone who is just establishing credit for the first time.

Keep in mind that Vantage scores won’t wipe away a track record of bad credit. You still have to prove you’re financially responsible. The goal here is to level out the playing field more in the favor of borrowers.

2 Ways To Get A Good Credit Score Fast

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Need to rebuild your credit? There are several ways to go about improving it. Some are obvious, some not as obvious. Here are two in particular that most people aren’t aware of:

  1. Go to a bank or credit union and get a prepaid credit card. This is where you give them $300 of your own money up front and they give you a credit card with a $300 limit. Spend $50 on this prepaid card and make the payment to the bank at the end of the month (basically back to yourself). This comes up as an additional good account on your credit report. This simple prepaid card could take a 570 credit score to 620 in a matter of months!
  2. Another way to build credit is to live within your means. Essentially, don’t buy what you can’t afford. Just because you’re approved for a loan doesn’t mean you should take the full amount. If anything were to happen to your finances, you don’t want to be on the hook for several debts.

Major Hidden Factor That’s Killing Your Credit Score

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One of the biggest mistakes people make when trying to be ‘responsible’ with their credit is using too much of it. Most people believe that if they use their credit cards to the max and pay it off at the end of the month, this helps build credit. This is not true. This actually looks as if you’re overusing your credit, thus it’s not building it.

This is called credit utilization percentage and it’s one of the largest factors when it comes to maintaining and improving your credit score. For example, if you have a $1000 credit card and you charge 400 on that $1000 credit card, your credit card utilization rate is 40%. This is considered really high and will hurt your credit.  The best thing to do is not overuse your credit. Also, do not close cards that you aren’t using any longer. Keeping them open gives you a higher availability of credit, meaning lower utilization rate.

6 Tips For Pulling Your Credit Score Out Of The Dumps

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A shaky credit score means the difference between getting approved for a loan and being denied. And when you’re ready to go for that first home, or new car the last thing you want is to be denied. If you know your credit is bad, there’s no time like now to make steps towards improving it. Repairing your credit score won’t be a quick fix, but with a little consistency, it can be done. Here are some ways to start repairing your credit score:

  • Pay down your balances and keep them low.
  • Get rid of balances on multiple credit cards.
  • Pay off balances with the smallest balance first, then move on to the next highest balance.
  • Leave old debts and good accounts on your report as long as possible.
  • When shopping around for a lower rate, try to do it in a short period of time.
  • Pay bills on time.

No matter how horrible your credit report may look, it can be improved over time.