international student life

international student

VantageScore New Credit Score Calculation that benefits you.

Paid off collection accounts will not affect your credit. Uses information reported in last 2 years instead of 6 months. Scores align with FICO score.

Credit Scores are very important for anyone wanting to get a loan, mortgage or any other type of credit from a bank. Keeping your credit score high is therefore essential to getting a loan and getting it at a lower interest rates.

The bad thing is that the system tends to penalize people who have lower scores by either denying them credit or giving credit at higher interest rates, making it harder for them to pay back and increase the likelihood of them defaulting, further hurting their credit score. Itís a vicious cycle.

But there is some good news for people who have challenges with their credit scores. Recent changes to the way credit scores are calculated can help you get a break and work in your favor.

VantageScore , a major credit score company has updated their formula in that if you pay off an account that has gone to collections, they will not put that as a bad mark for your credit.

However the company that calculates FICO Scores still holds paid off collection accounts against your FICO score.

VantageScore is also streamlining its credit scores to match the FICO scores of between 300 and 850 and this is going to make Credit score reading easier.

Most credit scoring companies calculate a personís credit based on information reported within the last 6 months. This has left millions of people without credit score because they may not have any debt or bills to pay in last 6 months.

VantageScore is trying to remedy this by considering information reported in the last 2 years and this will help millions of people get a credit score making it easier for them to get credit and loans.

However, it is good to remember that only about 10% of credit lenders, mostly credit card companies use VantageScore. Most banks use FICO scores.

But itís is still good news for credit card consumers to have VantageScore update their formula to help customers improve their credit score hence enable them get credit cards at lower interest rates.