As we discussed in a previous post your credit score is made up of five main categories. The information for each category is collected by the three credit rating bureaus, Experian®, Equifax® and TransUnion®, and used by credit companies like FICO to generate a credit score.
Though credit scores are not an absolute predictor of whether or not a person is going to default on their credit payment, lenders still use it as a barometer of a borrower’s ability to repay a loan in the future.
How Are the Scores Different
FICO credit scores fall into these five tiers:
- Exceptional: 800 and above
- Very good: 740 to 799
- Good: 670 to 739
- Fair: 580 to 669
- Poor: Below 580
VantageScore levels fall into these four tiers:
- Superprime: 781-850
- Prime: 661-780
- Near prime: 601-660
- Subprime: 300-600
The distribution in weight each credit category has is different as well.
Which Score Do Lenders Use
To date, more than 90% of top lenders trust FICO Scores as a fair and reliable measure of whether a person will pay back their loan on time. Because of this they use it to make faster, fairer, and more accurate lending decisions.
While other credit scores are available, they can very different from FICO Scores—sometimes by as much as 100 points!
By consistently using FICO Scores, lenders take on less risk, and you are able to get faster and fairer credit approvals, terms, and interest rates.
To get the facts about your credit score and start making improvements today contact Millennium Financial Services to book a free consultation. https://bookmillenniumfinancialservices.as.me/schedule.php | (833) 752-7334.