Credit Confused

Understanding your credit score can definitely be confusing! More importantly making sure you get the right credit score is critical if you are looking to get a car loan.  Credit scores typically range from 300 – 850 and this three-digit number is what lenders use to determine whether or not to extend you credit.  That credit can be for a car loan, mortgage, student loan or credit cards.  Your credit score can also impact your ability to get a job or how much you pay for insurance. 

Using some of the more well-known popular credit sites typically provides what is called a Vantage score and not your FICO credit score. The Vantage score was launched in 2006 as a collaboration between all three major credit bureaus Transunion, Experian and Equifax.  The Vantage score gives you one blended score so if you received your credit score from a site such as Credit Karma or CreditSesame it will probably be different from your FICO score.  Your FICO score is based on each credit bureau and what information they have for you in their system.  Your FICO score can vary depending on which bureau you or the lender are using.

There are multiple versions of both the FICO and Vantage score and lenders use different versions depending on the type of credit being extended.  Regardless of which score is being used both the FICO credit score and the Vantage score consider the following five key components when determining your score:

        ✔  Payment history (35%)

        ✔ Total debt owed (30%)

        ✔ Age of credit accounts (15%)

        ✔ Mix or type of credit (10%)

        ✔ Inquiries or new credit accounts (10%)

Not all of these components are weighted equally and it’s important to know which of these factors will have the biggest impact.  On-time payment history, as well as, managing the total amount of debt you owe will impact your score the most.  If you have a history of late payments it’s important to start paying all your debts on time each month.  At Hustle Girl Financial we encourage clients to pay two days before the due date to insure it is received on time by the creditor.  We also recommend not using more than 30% of your available credit.  The more of your credit you use or the higher your debt load the more it will impact your score. 

Check out my latest video which goes into more detail on credit scores and what you need to know to manage your credit.

Good luck on your credit journey and feel free to reach out with questions here or via the Hustle Girl Financial YouTube channel.  Until next time I wish you love, peace and a whole lot of Hustle!

Sincerely,