VantageScore vs TransUnion, Equifax, and Experian models
September 30, 2019
Under the old model, most mortgage lenders use FICO credit scores because Fannie Mae and Freddie Mac require it. With this, the three major credit bureaus—TransUnion, Equifax, and Experian — your FICO score came from:
- Payment history—35% recent history weighted a bit more heavily than the distant past.
- Debt utilization—30% amount of debt outstanding as a percentage of the total.
- Credit history—15% how long the borrower has been a ‘good’ credit user.
- Recent credit searches—10%
- Types of credit—10% i.e. ‘mix’
VantageScore is the main source for approving credit cards.
VantageScore uses trended data.
- PLUS: Trended data gives a higher score when paying down debt vs minimum payment each month &/or debt increasing.
- MINUS: Traditional high score borrowers often carry several cards with high limits, resulting in lower scores under the new system, because of potential to run up credit card debt quickly.
~ today’s tip from your NetWorth Portfolio Broker ~
CREDIT SCORES: Not only affect your ability to GET a mortgage, it affects: all loan rates/ cost of and ability to get insurance/ job applications. I’ve seen folks pay a 10 fold+ increase on their insurance policies just by ‘letting it go back to the bank’ (and yes, bank can come after you years later)
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