USC Credit Union Blog

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Why Great Credit Scores are like Disneyland Annual Passes

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Good credit scores are like Disneyland tickets, but great credit scores are like Disneyland Annual Passes.

Two friends recently gave me the magical gift of a Disneyland Annual Pass. I've been to Disneyland before, but becoming a passholder suddenly made me feel infinitely more special. This is because I know that a Disneyland ticket will allow me to experience the magic of Disney for a day, but Disneyland Annual Passes allow me to experience unlimited, endless, Disneyland magic. Similarly, good credit scores might allow you to obtain certain financial assets, but great credit scores greatly expand your access to financial assets, such as credit cards, auto loans, or even mortgages. Financial institutions use credit scores to determine whether or not people can borrow, and at what interest rate they should borrow at. Credit scores are pretty important, which is why it's necessary that we understand how our scores are being calculated.

When Americans talk about credit scores, they typically use "Credit Score" and "FICO" interchangeably, in the same way they may use the word Kleenex to describe facial tissue. The word has turned into a generic term for how lenders evaluate creditworthiness, but Ezra Becker (vice president of research and consulting for the credit bureau TransUnion) says there is actually a variety of credit scores that can be used.

For example, VantageScore Solutions is a new company founded in 2004 that was created as an effort to create more choice in the marketplace. The Vantage Score uses a different method of calculation than the FICO score, and it is said to be more friendly and forgiving. 


How Vantage Score is Calculated: 

In the calculation of the Vantage credit score, the scoring model considers the following:
•    The amount of your recent credit (30%).
•    Your payment history (28%).
•    Your current credit utilization rate (23%).
•    The size of your account balances (9%).
•    The depth of your revolving credit (9%).
•    Your available credit (1%).

 Now, the FICO scores use a different computation method. It considers:
•    Your payment history (35%).
•    Total amounts that owe in debts (30%).
•    The duration of your credit history (15%).
•    The type of credit you have used (10%).
•    The amount of your new credit (10%).

A major benefit of the VantageScore model is that it enables many consumers to have a credit score. It is estimated that the VantageScore assigns scores to millions of users who cannot be graded by the FICO system. Another advantage is that a credit line has to be one month old only for it to be factored in your score. Still, the model considers your account history for the past 24 months. If you wish to rebuild your credit and show that you have made a significant progress over a span of time, VantageScore is a good option.

One metric the Vantage Score considers is the size of your account balances. Lower balances = higher Vantage Score. This might be discouraging for someone with a high credit card balance, but USC Credit Union is here to help! We offer a 15-month 0% APR on purchases and balance transfers for both our Platinum Credit Cards. This is perfect if you want to transfer your balance and make strides towards reducing your balance.

USC Credit Union's Platinum Rewards MasterCard is a great credit card to use to change your credit habits for the better. Learn more about the benefits here.


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