Know your Credit Score Scale

If you are looking for understanding about what credit score scale is, then read this article. This article will provide you the concepts that you need to know about credit score scale. These are the formula used, the difference between the formulas, and the criteria on setting the credit score scale. At the end of this article, you should be able to know how your credit score scale is calculated.

There are two formulas used to calculate your credit score scale. These are the FICO score and the Vantage Score. In 1990’s, FICO score was recommended to be used as credit score scale by to mortgage giant corporations Freddie Mac and Fannie Mae. They are responsible for over half of the mortgages in the country that is why lenders heeded to use FICO score. In March 2006, Vantage Score was announced to be used as the new credit scoring system.

There are a lot of differences between the two formulas used in calculating your credit score scale. Though the two have most of the same methodology but some things are different. It is hard to tell which carries more weight in different areas. It is hard to determine also because these formulas are not available to the public. Here are some of the differences between the two formulas. The FICO score uses a credit score scale that starts at 300 and goes to 850. The Vantage Score uses a credit score scale that starts at 501 and goes to 990. The FICO scale is large with a range of 550 compare to the Vantage range of 489. Another is with FICO score there are five different variables used to formulate your FICO score. On the other hand, Vantage Score uses six. Now that you know some of the differences, let us discuss the criteria both uses on setting the credit score scale.

As mentioned above, FICO score uses five different variables to formulate your credit score scale. These are paying on time, credit-to-debt ratio, length of your credit history, the mix of credit accounts used and the number of inquiries and newly opened accounts. The Vantage score has the five criteria also with the addition of the available credit. Paying on time is the most significant component of your credit score, around 35 percent. Credit-to-debt ratio follows around 30 percent which computes the ratio of what you owe to your credit available. The lower the ratio, the better score you will have.

Understand the different factors to formulate your credit score scale is a way to know what your credit score is. Now that you know these factors, it will be easier to get the credit score you want.

On a personal note, if you're truly having problems with your credit and you are the sole bread winner for your family, please see professional help. There are a lot of family credit counseling services available to assist you in your time of need.