Information Center – News and Articles about Credit Cards
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FICO vs. Vantage Score on Your Credit Card Deal
Credit score is something you begin to establish even before you start making your carrier. The thing that credit score is one of the major keys to your financial success you learn almost at your mother's knee. Your credit rating plays the most significant role in mortgage loans. High credit score is what guarantees you an approval from mortgage lenders.
So, most of you starting with your very first credit card deal do your best to establish good credit history. You regularly pay off your balances in full, do not exceed your credit limit, in one word, try to follow all the rules of proper credit card use. You buy your credit score from a credit bureau and it is definitely way above average. And now imagine what your reaction will be when you get rejected in a mortgage loan.
Are you revolted? You feel like you have been cheated? Do not rush to jump to such conclusions. There is a sound explanation for this case.
The thing is that besides traditional FICO score, there is VantageScore that has become pretty popular lately. These are different systems of credit score calculation. FICO score has a range of 0-850, while VantageScore ranges from 0 up to 990. Mortgage lenders use mainly FICO score, credit agencies give their preferences to VantageScore calculation basis.
The catch is that credit reporting agencies provide credit consumers and lenders with different types of score. Generally, it is up to a credit bureau to decide what credit score to provide. They choose the type of a deal that is more beneficial for them. That is how report agencies being a mediator between credit consumers and credit issuers make their own business.
Credit card owners and lenders apply for a credit score for different reasons. Credit consumers need to know their score to define whether they have a chance to get approved for a credit card offer with lower rates and other more favorable terms. And they check the score, of course, in order to find out if it is good enough to get a mortgage loan and to figure out what rates level - prime or subprime - they are eligible for when paying off their mortgage debt.
As for banks, they need your score to define your borrowing power, and determine the risk of your making late payments.
So, where do your interests collide with lenders'? Let's say you have discovered that your VantageScore makes up 700. Imagine your excitement when you find out that this figure belongs to a prime mortgage consumer category. You apply for a mortgage loan being 100% sure you are to get approved. And bang! You learn that you are eligible for only subprime mortgage rate. What is your problem, fellas? That is what you will think of the lenders.
Do not get furious. In fact, your actual FICO score in this case equals to 594, and this is the figure the mortgage lenders refer to. So, the lender has a legal right to charge you higher rates.
The problem is not all mortgage lenders reveal the information on the credit score system they use. So you need to make sure that with your FICO score you will qualify for getting a mortgage loan with the prime rate. As it is typically the FICO calculation system mortgage lenders use.
So, to make two ends meet and to get a mortgage loan approval with low rates, you are to pay special attention to the credit score type you have. And make sure your credit score information coincides with that from mortgage lenders. And good luck to you in your new house!
We are used to see credit cards the way they look today, and it is hard to imagine that they looked different and served for another purpose than paying for goods and services. We call them plastics. In fact, a century ago credit cards had a different shape, size and were not made of plastic.
The appearance of credit cards dates back to the beginning of the XX century. Who were they created for? The target audience was wealthy people. The cards could be used as business certificates and licenses for the so-called "loyalty programs" at some restaurants, gas stations and merchants. Those cards, you can be surprised, were made of cardboard.
Rapidly growing credit card crime rate causes more and more concern of credit consumers and credit providers as well. Credit card fraud is a number one card holders complaint to Federal Trade Commission. According to the statistics, over 85% of credit card owners that fell victims to credit scam discover the fraud only after they get turned down by credit issuers, having applied for a new credit card or loan.
Credit bureaus cannot stay indifferent to the problem of credit fraud and identity theft, in particular. Equifax, one of the three US major credit bureaus has introduced a new ID theft protection service. "ID Patrol" is a multifunctional tool that allows protecting customers from identity theft.
You can find hundreds of e-articles and tips on reasonable credit card spending and staying away from debts. After you read them, it seems that it is pretty easy to stick to several rules of rational credit card use. But when you try to put theory into practice, it turns out to be much harder than it seemed.
Even if you do your best and manage to live within your financial means and spend the amount of money on your credit card that you can afford to pay off, you cannot be protected from unexpected situations in life and some external factors. Now that the US economy is experiencing a slowdown, it is high time to do the impossible and take control over you spending habits.
People got so much used to comfort, to living in apartments and houses with all conveniences. Can you imagine living without water, gas or electricity? Like cavemen. Me neither. However, utility bills are among the most avid money eaters on your expenditure list. But most people just make a helpless gesture looking at their monthly credit card statement. That's the way the cookie crumbles.
Actually you can make the cookie rumble the way you need it. You just need to make some efforts and get used to saving on utilities. Keep on reading and you will find several tips on how to reduce your utility bills and cut down your monthly credit card payments.
