The three major credit bureaus, Equifax, Experian, and TransUnion, came up with the Vantage credit scoring system. Everyone knows about it now. On a scale from A to F, the system gives people grades. Even though I've done a lot of research, I still don't know how lenders will use this score or which lenders will choose to use the Vantage score instead of the FICO score.
Will they be flexible in how they look at it and look at the actual score, or will they only look at the grade from A to F? No one knows for sure, which is a shame. Ask the lender what credit score they use when you apply for a loan for now.
The FICO score was used when I recently refinanced my home. Well, I just recently got my credit report and score from the three biggest credit bureaus. Since I haven't been late on any payments in the past 10 years, I thought I would get the best credit score possible or very close to it. My scores were at least 760.
I wanted to get a FICO score when I ordered my Experian report, but I could only get a Vantage score. I got an 819 on my Experian Vantage score. To my surprise, I was told all of these silly things about why my credit scores weren't higher:
- Your report says that there are one or more inquiries on file. In June 2005, I had one inquiry. There was one question in February 2006 and another in October 2006. You shouldn't ask questions more than twice a year, unless you want to compare prices. I'm getting in trouble because I had two inquiries in a year's time.
- Your report shows that you have too little available credit across your open revolving accounts. I only have one credit card with a $3000 limit. They tell me that my credit score would be better if I had more credit cards.
- Your report doesn't show home loans, which is wrong because I've had a mortgage for the past seven years.
- Your report says that it's been too short of a time since you opened your oldest revolving account. My credit card is my only revolving account, and I've had it for 10 years.
- Your report shows that the ratio of balances to credit limits across all of your open revolving accounts is too high. My credit card balance was about $900, which is only 30 percent of the credit limit, which is the recommended amount that consumers should have on their credit cards.
Well, it goes without saying that I wrote to each credit bureau and argued against every reason they gave. I've heard back from two people, and I'm still waiting for the third. I will order a copy of my credit report again after I get it to see if my scores have gone up. I have had a hard time figuring out how to get a credit score of 800 or more on the FICO scale. From what I can tell, an 800 is no longer possible because the credit bureaus will find ways to keep your score from being as high as it could be.
I tell everyone, whether they have good credit or bad credit, to order a copy of their credit report once a year, read every line on it, and read all the information that comes with it. Check your credit report to make sure everything is correct. Even a few points on your credit score can make the difference between getting approved and getting turned down, and we all need those extra points. Good luck!
