Fico Scores, Advantagescores and Credit Reports Explained

Hello the is Debra Marie the Tax Queen coming back with another wonderful post
where I will be sharing some helpful information on fico scores, advantagescores and
credit reports.  I will be going over the basics so you’ll have some knowledge when
researching this topic yourselves. So, let’s begin!

You’re probably wondering why you need to know about this stuff. Well when you go to
buy a car, a house or even apply for a credit card this is what the lenders will be
checking. They will be getting you info from three national credit bureaus
(Equifax, Experian and TransUnion) and they compete to capture, update and store
credit histories on most U.S. consumers. The fourth bureau collects what the Big Three
don’t. A range of data falls under the fourth-bureau umbrella, including rent payments,
cellphone and utility bills, magazine subscriptions and gym memberships. But we won’t
talk to much about that one…actually this is all we will talk about when it comes to the
fourth bureau.

So, what are credit bureaus?

A credit bureau is a company that collects and maintains individual credit information and sells it to lenders, creditors, and consumers in the form of a credit report. While there are dozens of credit bureaus across the U.S., most consumers are familiar with the big three: Equifax, Experian, andTransUnion.

Ok, now that you understand the functions of the bureaus it is now time to get to the
juicy stuff…. THE SCORES!  Let’s start with the FICO Score!

What is a FICO Score?

Well first off, FICO is an abbreviation for the Fair Isaac Corporation, the first company
to offer a credit-risk model with a score. Bill Fair and Earl Isaac are the founders.
A FICO Score is a three-digit number based on the information in your credit reports. It
helps lenders determine how likely you are to repay a loan. This, in turn, affects how
much you can borrow, how many months you have to repay, and how much it will cost
(the interest rate).
What are the credit score range?
Credit Score Rating % of People
580-669 Fair 17%
670-739 Good 21%
740-799 Very Good 25%
800-850 Exceptional 21%
THE MOST POPULAR CREDIT SCORE COMPANY YOU MAY HAVE
HEARD OF IS CREDIT KARMA…. BUT HOW ACCURATE ARE THEY?
WELL HERE IS A LITTLE INFORMATION ABOUT CREDIT KARMA

Credit Karma is a for-profit business that makes money by giving you a free credit score
in exchange for learning more about your spending habits and charging companies to
serve you targeted advertisements. Their business model is to earn commissions
off loan products you purchase through its site. Although the site positions itself as a
trusted adviser, its motivation is to sign you up for new loans. Overuse of credit can
have financially catastrophic results. Use Credit Karma to monitor your score–not to
received unbiased advice.

Also, the scores and credit report information from Credit Karma comes from
TransUnion and Equifax, two of the three major credit bureaus.  They also provide
Vantage Score credit scores independently from both credit bureaus.
And because Credit Karma uses only two of the three major credit bureaus, a
consumer’s credit score might not be entirely accurate. Although Vantage
Score’s system is accurate, it’s not the industry standard; the companies that will
approve or deny loan applications are more likely to look at FICO scores.
So, what’s the difference between a Fico score and a vantage score?

Although both the FICO Score and Vantage Score use a credit range of 300 to
850, there are some key differences in how the two scores are calculated. FICO
gives more weight to a consumer’s payment history, while Vantage Score
emphasizes total credit usage and balances.

As mentioned earlier although a Vantage Score’s system is accurate, it’s not the
industry standard. Credit Karma works fine for the average consumer, but the
companies that will approve or deny your application are more likely to look at
your FICO score.

What other companies are similar to Credit Karma and uses
the vantage score.
1. Credit Sesame
2. Quizzed
3. Credit.com
4. WalletHub

Now what’s the difference between a credit report and a FICO
score?

Your credit report contains personal information, credit account
history, credit inquiries and public records. This information is reported by your lenders
and creditors to the credit bureaus. … These four categories are: identifying
information, credit accounts, credit inquiries and public records.
A FICO Score is a three-digit number based on the information in your credit reports. It
helps lenders determine how likely you are to repay a loan. This, in turn, affects how
much you can borrow, how many months you have to repay, and how much it will cost
(the interest rate).

How can I get my credit report?

By logging on to AnnualCreditReport.com, you can check your credit reports for free
once every 12 months from each of the major credit bureaus—Equifax, Experian,
and TransUnion. However, these reports will not give you a credit score.
While you can pay one of the reporting companies for your credit score, you really don’t
have to anymore. There are a number of websites and credit card companies that will
give you your credit score for free.

Here are five free services and five credit card companies that provide credit scores to consumers, along with what each of them offers and how they differ.
Credit Card Companies That Provide Free Credit Scores.

In addition to the services listed above, many credit card companies offer their
customers, and sometimes others, a free look at their credit scores. They include:

1. Discover Card—FICO Statement
Discover Card holders receive their TransUnion FICO credit score for free
on each monthly statement.

  1. Barclaycard—Credit Factors
    Barclaycard customers get a free FICO score on their monthly statements.
    In addition, they can see up to two factors that affect their credit score.
    These might be things like “balances on a bank card or revolving accounts
    too high compared to credit limits”.

3. Capital One Card—Credit Wise
Formerly known as Credit Tracker, Capital One’s Credit Wise service is
available to anyone, whether or not you’re a cardholder with the company.
Through this service, you can get access to your Vantage Score 3.0 every
month and be alerted to any changes in it.

4. First Bankcard—Monthly Lender ScoreFirst National Bank offers its credit card users a free FICO Bankcard Score
9, which is a score tailored to credit card lending. It is not, in other words,
the score a mortgage lender would use when deciding whether you can
borrow money to buy a house, but it will still give you some idea of where
you stand. Your score is updated once a month.

  1. Walmart Credit Card—Electronic Score
    If you’re a Walmart credit card holder, you’ll receive a free FICO score
    each month if you sign up for electronic monthly statements. You’ll also be
    able to see two “reason codes” affecting your score.
    Well I hope you enjoyed our little information session about fico scores,
    advantagescores, and credit reports.  If you are curious or have questions that
    you would like for me to do a podcast on please leave me a message or email
    me at debra@dmtbookkeeping.com or any of my social media platforms under
    dmtbookkeeping.  As always thank you for listening to my podcast and until next
    time …. Bye!

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