FICO... the scores we love to hate!
If you haven't heard about FICO scores, you must be living in a cave. Cave or not, FICO scores are the little three digit numbers that lenders use to gauge your credit worthiness.
FICO scores help lenders decide how much money to lend you and at what interest rate. They will either love you and give you a great rate due to your fabulous FICO score OR love you even more since they are able to charge you much, much more due to your low score.
You can't blame them. FICO scores are a reflection of your historical outlook on managing money. In essence, how financially responsible are you?
Up to now, we've been trained that the higher the score is, the better it is. FICO scores start at 300 and go up to 850, with most Americans scoring between 670 to 700.
But now these scores come with letters (GRADES!),thanks to the new VantageScore. VantageScore was developed as a joint effort by the three major credit bureaus - Experian, Equifax, and TransUnion. It is being marketed as a much more comprehensive way for consumers and businesses to grade one's credit history.
VantageScore ranges from 501 to 990, with each score having a corresponding grade attached to it:
| Score | Grade | |||
| 901-990 | A | Super Prime | ||
| 801-900 | B | Prime Plus | ||
| 701-800 | C | Prime | ||
| The scores above are considered credit | ||||
| worthy | ||||
| 601-700 | D | Non-Prime | ||
| 501-600 | F | High Risk | ||
The credit bureaus feel that this new rating system will help consumers understand their scores better. Well... of course, we've all been in school and know if we're an A student or a C student. Who wants to flunk? Not me.
They also claim that it will be easier for people with bad or no credit histories to get better loan rates and terms, as they score credit information differently than FICO. This doesn't quite make sense to me. If you have bad credit why would this rating system allow you better terms? Well... we'll need to wait and get more information on this.
Overall, VantageScore is being heavily marketed as a consumer tool. Experian is currently the only credit bureau that sells the VantageScore directly to the consumer.
VantageScore, just like the FICO score, is heavily dependent on the creditors providing accurate information. If there's an error or missing information on your credit report, your score will be lowered. It doesn't matter how it was calculated.
So for now, make sure to regularly check your credit reports for errors before getting credit scores of any kind. There are lots of services that offer free annual credit reports. Visit http://www.annualcreditreport.com/ to request your report for FREE.
So... WHAT IS YOUR GRADE?
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If you're thinking of buying or selling your home in Pasadena, CA and surrounding cities, please visit me at http://www.irina4realestate.com/ or email me at Irina@Irina4RealEstate.com.
For information about Pasadena, please visit the following links:
- Pasadena Real Estate Guide and FREE Multiple Listing Search (Everything you need to know to buy or sell a home in Pasadena)
- Everything you ever wanted to know about Pasadena and more! (Important Information)
- Looking for condos near Pasadena? How about Monterey Hills?(Great little gem of an area where you can still get great deals on condos and townhomes)
- Pasadena's Old Town - Restaurant Row
Other interesting information:
- Thinking of Selling Your Home - What should your Agent be doing?
- Heard the Buzz about Staing? What is it?
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