credit-2Credit Basics Part 2 Experian offers some very simple but sound advice about credit scores.   This week we will be sharing some of their insights with you.  Credit Score Facts

Learn more about score factors and why lenders use credit scores. Find out how your credit score rates before approaching lenders.

Types of credit scores

There are primarily two types of scores – generic scores and custom scores. Custom scores are generated by individual lenders, who rely on credit reports and other information, such as account history, from their own portfolios.

Vantage Score

Vantage Score is the first generic credit score developed cooperatively by Experian and the other national credit reporting companies. This score uses the same exact formula across all three credit reporting agencies.

Why lenders use credit scores

Before credit scores, lenders physically looked over each applicant's  credit report to determine whether to grant credit. A lender might deny credit based on a subjective judgment that a consumer already held too much debt, or had too many recent late payments. Not only was this time consuming, but also human judgment was prone to mistakes and bias. Lenders used personal opinion to make a decision about an applicant that may have had little bearing on the applicant's ability to repay debt.

Credit scores help lenders assess risk more fairly because they are consistent and objective. Consumers also benefit from this method. No matter who you are as a person, your credit score only reflects your likelihood to repay debt responsibly, based on your past credit history and current credit status.

You can read more from the Experian website on this information at

Check back tomorrow for more information on credit basics that will help you.

At HOPE we help educate clients every day on how to make wise financial decisions. If you would like to know more please call us at 704-503-3669. Our staff is waiting on your call.