VantageScore

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Eliminating Bad Credit
Bad credit also known as subprime credit in the mortgage industry, will affect your pocket book in more ways than making it more difficult for you to get a home loan. Not only will you have a higher interest rate on your mortgage but it will also translate into higher interest rates on car loans, store credit cards and the well-known bank issued credit cards. In addition, poor good credit can even... Read credit counseling article



Need for Credit Counseling Services
Do you feel the need for credit counseling services? Are you finding it hard to figure out how to manage your money so your debts are repaid? Are you having trouble making even the minimum payments on credit bills? Then it's time to call in the experts.

It is easy to get overwhelmed by repayments when you are juggling many debts. Thousands of people just like you experience difficulty i... Read credit counseling article



VantageScore
I recently saw on CNBC that a new credit bureau called VantageScore is trying to update and levelize the way that credit scores are tabulated for creditors. Their "leveled credit characteristics" across the three credit agencies, Equifax, Experian and TransUnion will try to ensure that any credit score differences for the same consumer are attributable to what is in each agency's database, not the scoring algorithm itself.

It is a little known fact that credit scores from the different credit bureaus can differ markedly in the score they give the consumer. Each may have different credit card and mortgage loan histories, and one or all of them could have erroneous or incomplete data that can affect the credit score. Most lenders will report to one or two, but not every one of the lenders report to them all. FairIssac, the developer of the original credit scoring system, has always been the "gold standard" of credit score numbers. VantageScore may change that.

VantageScore is unique as the first credit scoring model to be developed jointly by the national credit reporting agencies. That way, VantageScore can enjoy the expertise of industry specialists to lessen score variability and increase consistency in the consumer's credit score. This can eliminate confusion for you and your lender.

To start with, VantageScore uses a different score range than the FICO Score model. The VantageScore range is 501-990. Using multiple scorecard technology, VantageScore seeks to give the lenders superior risk prediction. This results in a stronger separation of good and bad performing accounts. The new scoring system returns more predictable scores on "thin-file" consumers, which are those with little credit history to score. So, even if you have limited credit history, lenders can use VantageScore to best assist you under varied circumstances.

The criteria that VantageScore uses and the weights attributed to each are:

Payment History 32%
Have you consistently paid your accounts in a timely manner?

Utilization 23%
How much of the total credit available to you are you currently using?

Balances 16%
What is the total of your current and delinquent account balances?

Depth of Credit 13%
How long is your credit history and do you have a healthy mix of credit types?

Recent Credit 10%
How many recently opened credit accounts and credit inquiries do you have?

Available Credit 7%
What is the total amount of credit you have access to?

So in conclusion, VantageScore will have significant benefits to the credit consumer because it is consistent, using identical scoring algorithms and leveled credit characteristics across all three national credit reporting companies. It is accurate, because knowledge of the data ensures the most accurate scoring algorithm. And, it is easy to understand and apply, having a score range of 501-990 with higher scores representing a lower likelihood of risk.

My hope is that if you are in the market for a credit card or mortgage loan, VantageScore can help you get a lower interest rate, or get you a loan when using the old scoring techniques would have denied you that loan.

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Getting Credit If You Have Bad Debt

No one wants to give you a credit card anymore. You are maxed out, what can you do? Here are a couple of options and we are going to have a look at them. One is a debit card, the other is a secured credit card.

Most people have heard of debit cards, they work like a mobile bank teller. You go to the store and it is time to pay so you pull out a card similar to a credit card and swipe it threw the machine. Enter your security code and the bank mystically transfers money from your account to the stores'. The key words are transfers money, if there is no money in your account nothing happens. It is similar to using cash, you have to have it to spend it.

The benefits of debit cards are you cannot spend more than you have in the account. There is some security to the debit card, if it is stolen you can cancel the card and get a new one. There have been numerous reports of "fake" debit machines at all kinds of stores. This is where a person working at the company brings in their own machine, when you swipe the machine it records your account info on the card and your security code. This gives them access to your account and normally they will empty it as soon as possible. The only defense against this is look at the machine, is there anything strange about it. If you are unsure ask to speak to a manager or use cash. Also check your monthly bank statements for any transactions you did not do and report that right away.

Some other downsides are you can spend all the money you have in your account. Debit cards only stop you when the money is all gone. For some of us that can be too soon in the month. For those of us with a flair for spending I still recommend using cash or the next type of card, a secured credit card.

A secured credit card is like a pre-paid phone card, except you can use it anywhere a credit card is accepted. It looks like a normal credit card but there is a value either recorded onto the card or the account the card is associated with. These are great for people who overspend because when the money is spent the card no longer works until you "recharge" the account.

One of the common downsides to these cards is there can be service fees galore to them. A small fee to set it up, re-charge it, statements and on and on. For some people who cannot use cash for everything I think they are the way to go. Shop around for the best deal and only put small amounts of money in this account to force you to watch your spending.

Take charge of your spending by using these methods to get spending under control. Be smart to be wealthy.

Did you find those tips on debt management useful? You can learn a lot more about how debt management can help you reduce debt here.




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VantageScore
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