Credit Score: Esperanto in Score Calculating Systems

Credit History

Your credit score is an indicator of your financial health for creditors. Your score plays the most significant part, when it comes to lending decisions. You should keep track of every little change in your payment report and always be aware of what your current credit score is. This will help you narrow the range of plastics to study when choosing a new plastic.

You can learn your score from your credit report, which you can order at a credit bureau. The three US major bureaus - Experian, Equifax, and TransUnion can provide every cardholder with a free credit report once a year. As most financial experts recommend checking your report on a regular basis, cardholders take advantage of getting free reports at the three bureaus. But most of customers get confused when they see way too different numbers of their credit scores. Why does it happen?

FICO scoring system is considered to be a basic and most popular model of calculating credit score. According to this system's rules, score ranges from 350 to 850 points. The problem is that FICO score is not the only and generally accepted scoring system. And different credit reporting agencies use different systems. And while FICO score of 660 points gives you a status of a customer with good payment history, according to another scoring model, with the same 660 points you will be regarded as a customer with bad credit.

In order to avoid misunderstanding the three credit bureaus teamed up and created a sort of Esperanto in scoring languages. The developed a new uniform scoring system, called VantageScore.

VantageScore ranges from 501 to 990 points. Though the upper cap in VantageScore is considerably higher than it is in FICO score and it may puzzle you, your VantageScore is always the same at all credit bureaus. With this kind of score you will not have to worry that your potential lender when checking your scores comes across different information.

But still, it is not so easy for a cardholder that is not sophisticated in credit score terminology to orientate in numbers and match them with the type of credit. According to FICO score your credit rating is conferred a certain status - no, bad/poor, fair/average, good and excellent. The type of your credit shows you what plastics you are eligible for. For instance, good rating allows you to qualify for good, rewards, low APR and balance transfer credit cards.

VantageScore has a bit different gradation. If you have from 501 to 600 points - your rating is indicated as "F" grade (no credit). If you have between 601 and 700, your score is defined as "D" grade (poor credit). "C" grade score with 701 to 800 points allows you to get fair plastics. "B" grade - 801-900 points is referred to as good credit. And 901 to 990 points grant you an "A" grade status of an excellent credit owner.

That is the simple math. So, once you see that your 680 points allow you to apply for only bad/no credit card, or your score is above 900, do not panic. It doesn't mean that score calculating system is wrecked. Remember about VantageScore.

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