Oct 21 • Personal Credit
Credit Scores and Scoring Models
A credit score is a number that is used to predict how likely you are to pay back a loan on time.
Companies use credit scores to make lending decisions. Credit scores are also used to help decide the interest rate and credit limit you receive on a loan or credit card.
Do you have access to your personal credit scores? Are you seeing FICO scores or Vantage Scores? Or worst, a third-party consumer credit scoring model. Do you even know? If you don’t know make sure you find out. You need to know what you are looking at.
Most of us have heard of a FICO score. FICO stands for Fair, Isaac, and Company. A FICO® score is a particular brand of credit score. FICO was a pioneer in developing a method for calculating credit scores based on information collected by credit reporting agencies. The FICO score is used by 90% of all lenders.
Another scoring model gaining in popularity is VantageScore. Credit bureaus Experian, TransUnion and Equifax created the algorithm to produce VantageScore in 2006 to compete against the better-known FICO score. VantageScore has begun to get lenders’ attention, and it is widely offered to consumers for free. Currently, less than 10% of lenders use VantageScore.
No matter what scoring model you are using, be sure to know what you are looking at and be sure to monitor your credit score and credit file. Learn how that particular model comes up with a score. This way, you’ll be able to work on improving the “heavily weighted” areas to improve your scores. Most all credit scoring models weigh making payments on-time and consistently the most heavily weighted component.
What is the next most heavily weighted component in your scoring model.
0
0 comments
Credit Scores and Scoring Models
skool.com/fast-track-capital-academy-1577
Designed for serious entrepreneurs who want capital now. Real strategies & real cash funding. 1-on-1 sessions with a 20-Year Credit & Funding Expert.
Powered by