FICO and Vantage 2.0 Credit Scoring Systems

Posted on July 7, 2011 Written by Leave a Comment

While not fully understood by most people, the FICO credit reporting system is the one that is most widely recognized in the United States.  Developed in the early 1950s by an engineer, Fair, and a mathematician, Isaac, the Fair Isaac Corporation or FICO is the most commonly used credit reporting system although it is not the only one.  Most creditors choose the FICO credit score, which comes from three credit bureaus known as TransUnion, Equifax, and Experian.  This software program generates a three digit score based on information provided for five specific categories.

One thing that many people do not know is that creditors may not report account management information to all three of these credit bureaus.  Some do but some will report to just one or two.  Because of this, if you ever wanted to order a copy of your credit report, it would be essential to obtain a copy of all three in that reported information would vary.  In addition, many people do not know that these three credit bureaus not only use the FICO software but they also use their own version of the credit scoring software.

As you will see from the following, several credit scoring options exist with the two most popular being FICO and Vantage.  Although FICO is the credit scoring system preferred by most creditors although with the newest version of VantageScore 2.0 being released in October 2010, it is being used often too.  While the original VantageScore was developed by all three credit bureaus, it is marketed through Experian.  This new version has improved overall performance over the initial 2006 release.

•    FICO – Reports credit scores of 300 to 850
•    FICO – Reports credit scores of 300 to 850
•    Experian Plus – Reports credit scores of 300 to 850
•    VantageScore – Reports credit scores of 501 to 990 or letter grade of A to F
•    Credit Karma Score – Reports credit scores of 300 to 900

In addition, once you order a copy of your credit report from all three reporting agencies, you would see that the numbers differ.  Typically, the difference between credit score from one report to another is minimal but sometimes, the difference could be as much as 50 points.  Then as you can see from the other credit scoring systems, the numbers to identify good to excellent credit are different from the way FICO reports.

Today, VantageScore just as FICO are partnered with the tree credit bureaus.  Although some of these agencies still use their own scoring system, many have not turned to either FICO or VantageScore.  Both of these systems are excellent and extremely helpful to creditors that want to reduce financial loss, to insurance companies that want responsible policyholders, and to employees looking to hire the best of the best.  Below are the credit score ratings for both FICO and VantageScore.

FICO

•    720-850 – Excellent – Represents the best score range and best financing terms
•    700-719 – Very Good – Qualifies for favorable financing
•    675-699 – Average – Qualifies for most loans and credit cards but with slightly higher interest
•    620-674 – Sub-prime – May still qualify, but interest would be much higher
•    560-619 – Risky – Obtaining a loan or credit would be challenging
•    500-559 – Very Risky – Credit score needs to be repaired and improved
•    499 and Lower – Extremely Risky – Loans and credit would be non-negotiable although secured credit cards would be approved

For FICO, the higher the credit score the easier it would be to secure a loan or credit.  In addition, lenders and creditors would offer the best available interest rates and terms.  However, any credit score lower than 500 would result in you being approved for loans and credit with sub lenders, which means paying high interest, not getting the best terms, and likely being charged high dollar fees.

VantageScore 2.0

•    901-990 – Super Prime (A)
•    801-900 – Prime Plus (B)
•    701-800 – Prime (C)
•    601-700 – Non-Prime (D)
•    501-600 – High Risk (F)

Just as with FICO, for VantageScore 2.0, the higher the score the better.  In addition to this credit scoring system generating a three-digit number, a letter grade is also generated, which removes any guesswork from the score.  In addition to the different numbers and letter grade, another difference between FICO and VantageScore is that while FICO uses five categories of data for a credit score to be generated, VantageScore uses six, with the additional one being “utilization” or amount of credit used.

 

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Processing Credit Cards and Payments

Posted on May 3, 2010 Written by Leave a Comment

Credit cards processing gained a great deal of popularity amongst among the masses that no business can be termed as complete and efficient if it doesn’t use credit card services. Definitely, without credit card services, most of one of the businesses would end up losing a significant chunk of business opportunities. Some people go to among the extent of classifying such businesses (which don’t use credit card services) as non-serious businesses.So what are these credit card services that we are talking about?

First, let’s check the equipments used for credit card processing. So, there are credit card processing softwares for online credit card processing, you’ll find credit card processing machines (i.e. the credit card reading machines at shops), you’ll find data verification/validation devices/softwares that verify one of the security information on credit cards, you will find communication devices/systems that enable safe transfer of credit card information from one point to an additional, and then you will discover other credit card processing equipments for example one of the credit card processing equipment that is used for the preparation of among the actual plastic (credit card).

Then you will find numerous service providers that provide services related to credit card processing. You will discover suppliers for credit card processing equipment and suppliers for online credit card processing services.

Then you will find postal and courier service that assist deliver credit card bills in time. You’ll find merchants/petrol-bunks etc which provide facility of payment collection boxes at his or her premises (one more imperative aspect of credit card processing).

If this happens in the credit card processing stage, the bank would usually require you to give them an alternate address where they send you one of the bill, via among the way this just assets that they wish to be sure that you are planning to pay! And if you get past this stage of the credit card processing with minor injuries to your ego, one of the next step will be to find out if you possess any unpaid balances or other credit card processing with other financial institutions. This completely means that they are trying to find out how cards are able to for and you’ll be capable of pay for theirs once you’ve passed among the credit card processing stage. They by and large do this to counter check if you do possess one of the capacity of paying for some of credit cards so they won’t get stuck a person that cant. And when you get passed this stage, still with minimal damage to your ego, one of the next step in the credit card processing stage is to verify your identity as a US citizen.

Because of among the US Patriot Act, everyone trying to get anything in among the US is required to own his or her identities verified because they don’t want terrorist getting anything inside US soil especially getting past credit card processing or when paying your bill and it is help to understand why you should pay your credit card bill online. You will then know why you should always pay your credit card bill on time. It is help to  And among the last part of receiving past one of the credit card processing is to own all one of the things they need to check in order and to meet one of the standards of his or her company, in a nutshell, to get a credit card and to get via credit card processing, you must have other credit cards that are active. Two, you must be a good payer and three you must not possess a last name that sounds like you are from Afghanistan-that is.

Anyway, you might be having problems when it comes to your credit card processing, most it among the time, it’s worth among the wait. Credit cards is great financial tool is used correctly and properly. It will enable the credit card holder to manage their finances. Having a credit card also ensure not only your money and your life as well because it is extremely convenient compared to carrying cash or checks every time you possess to buy or pay for something.

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Do It Yourself Credit Repair

Posted on July 5, 2009 Written by Leave a Comment

There are plenty of credit repair companies out there, promising to remove all negative items from your credit report.  Many of them do a fantastic job and can help your credit immensely.  What they won’t tell you is that you don’t have to spend hundreds of dollars fixing your credit.  You can do it yourself with just a little work and time.

The first step is getting a copy of your credit report from all three credit bureaus, Equifax, Trans Union, and Experian.  You can find them in the yellow pages or search for their contact information online.  Contact each of the bureaus and request they send you a copy of your report.  You will likely have to pay a small fee for each of them, but since you can’t fix your credit without them it’s a necessary expense.

When you get the report look on the back, this is where they will explain all the codes that you will find in the report.  Make sure you understand all of these codes so that you know which items are having the most negative impact on your credit and need to be worked on first.  The biggest ticket item is charge-offs.  Charge-offs mean the creditor has stopped trying to collect the debt and written it off as a loss.  Contacts charged off creditors and ask for a re-instatement, explaining the situation.  If they refuse then ask for a settlement amount, a settled account will look better than a charge-off.

Late payments are usually the easiest to clear up.  Just contact the creditor and make them a deal.  Ask that if you make a certain number of payments on time, they will remove the late payments from your credit report.  Most companies will accommodate this request.  Judgments need to be removed but are usually harder since you will have to pay off these loans in full.  Contact the lender for a payment arrangement and an agreement in writing to remove the judgment once you’ve paid off the amount.

These steps will greatly improve your credit and are easy to do yourself.  If you see any items on your credit report that don’t belong to you contact the credit bureau and they can advise you on the dispute process.

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How Much Credit is Too Much

Posted on May 25, 2009 Written by Leave a Comment

As simple as it would be to write down a number and say that much is the right amount of credit, it just isn’t that simple.  But how much credit is right?  Only you can decide that for yourself.  You do need to make some analysis of your lifestyle and finances before making that decision.

The number one rule for credit is, never borrow more than you can afford to pay back.  Figuring this out is a pretty straightforward process.  Take the amount of money that you take home from your job every month, so anything after taxes and other deductions.  Now subtract your necessities and things you have to pay.  This would be things like your rent or mortgage, food, transportation, utilities.  This would also include things that get paid on a quarterly or annual basis.  If you want to make sure you have some money put aside for fun stuff, include a set amount for these things now.

Finally, subtract from this amount any existing loan or credit card payments you have currently.  This is the amount of disposable income you have every month that could safely go toward paying off more credit.  But it isn’t wise to use this entire amount.  Emergencies occur and you’ll want to have something extra there to cover the unexpected.

Now that you know how much credit you can afford to have, you should spend it wisely.  The safest way to use credit is to pay is off immediately.  In the case of a credit card, this would mean using it for things you normally buy anyway and paying it off every month.  For a loan, pay a little extra on the payments, if there’s no penalty for doing so.  Sometimes this isn’t possible and you will need to carry a balance, but at least you can now be assured that you can responsibly pay it back with no added strain on your finances.

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