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Yes, there are MANY different credit scores out there. There are credit scores consumers can pull themselves through credit monitoring, mortgage scores, auto scores, and many more.
There are actually over 16 different credit "scorecards" that exist today. Each of these scorecards will reflect different credit scores. These scorecards are designed to help particular industries better gauge credit risk. The mortgage industry for example is more concerned with a consumers past mortgage history than anything else. So they weight home loan history heavier into the total score calculation than other accounts. So a consumer’s credit monitoring score might be 660. But then when they apply for a mortgage, their score might be much lower due to some past negative mortgage accounts on the report. Their mortgage score might even be higher than their consumer score, if they have past positive mortgage accounts. A credit score that a consumer pulls themselves will not be the same as their mortgage score. Their mortgage score won’t be the same as their auto score that car dealers pull either, because the auto score weighs past auto history heavier into the score makeup versus consumer scores. These different credit scorecards are designed to help specific industries better determine risk. Due to there being so many industries that offer credit, there are also just as many credit scores available. Plus, different scores are offered by different companies creating even more credit scores. FICO is the biggest provider of consumer credit scores. But now even the credit bureaus themselves are in the credit scoring game, providing their Vantage score. A Vantage score has scores as high as 990, while a FICO score can only be as high as 850. So even though a 700 FICO score reflects good consumer credit, a 700 Vantage score reflects below average personal credit. One thing is for sure; credit scores WILL be different based on who pulls the score and where the score is pulled through. Still good credit is good credit. And fundamentally any consumer who pays their bills on time and has a good long-standing credit history, including a lot of different accounts, will have a good credit score.
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That largest percentage of the credit score makeup of a consumer is from their payment history. Payment history counts for 35% of the total consumer credit score. This means how consumers pay their bills counts for more than one-third of their total score.
By law creditors have to wait 30 days to report a consumer late to the credit bureaus. After 30 days they will report the consumer late and their credit scores will go down. If they pay their bills on time, their scores go up. If they are late their scores will drop, and sometimes the scores can drop significantly. I have seen one late payment on a mortgage account lower a consumer’s mortgage score over 120 points. Late payments can have a massive impact on your client's credit score, which is why it’s so important that consumers never go more than 30 days late when paying their bills. Having lots of paid-as-agreed accounts consumers can better offset any late payments that might occur. Keep in mind that the 35% of the score that has to do with payment history, is a weights-and-balance of good versus bad payment history. The more good payments the consumer reports has the better their score will be. When paying a bill close to 30 days late, send the payment certified mail so they have confirmation of when the payment was sent. Creditors like to play games, and this evidence will help in case the creditor reports a negative mark against them, even when they did mail their payment before the 30 days passed. Remember, the biggest factor affecting consumer credit scores is payment history. |
Dan GarciaTrevana Properties is a placement company working with a variety of hedge funds, REIT's, commercial banks, specialty boutique lenders, private investors and other funding sources not widely known to the general public. Archives
November 2016
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