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Why Are There Different Types of Credit Scores?

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You probably know that you should be checking your credit score on a regular basis—but which credit score should you check? Do you need to know both your FICO credit score and your VantageScore, or is checking one credit score enough? How are FICO and VantageScore different from each other, anyway—and why are there multiple types of credit scores in the first place?

Originally, there was just one credit scoring service, the FICO credit score, created in 1989. The three major credit bureaus (Equifax, Experian and TransUnion) developed VantageScore in 2006 as an alternative to the FICO score. Both FICO and VantageScore offer different types of credit scores depending on what kind of information lenders are requesting and which credit score model is being used.

What does this all mean for you and which credit scores should you be tracking? Let’s take a closer look at how credit scores work, the different types of credit scores and what you need to know about VantageScore versus FICO.

What is a credit score?

A credit score is a three-digit number that represents your creditworthiness. Lower credit scores indicate that you are more likely to be a credit risk, while higher credit scores indicate that you are more likely to be a responsible borrower.

Although there are different types of credit scores, the two main credit scoring models—FICO and VantageScore—use a 300-850 point credit scoring scale. Each credit score falls within a specific credit score range and helps lenders understand how you have used credit in the past and how you are likely to use credit in the future.

What are the main credit scoring models?

Most types of credit scores fall under two main scoring models: FICO and VantageScore. The differences between VantageScore vs. FICO are relatively minor, in the sense that a person with a good FICO score is likely to have a good VantageScore as well. Likewise, a person with a bad credit score under the FICO scoring model is probably going to have bad credit in the VantageScore model.

Here’s what you need to know about the different types of credit scores:

FICO model

The FICO credit score was first developed in 1989 by Fair, Isaac and Company (now called the Fair Isaac Corporation). According to MyFICO, over 90 percent of top lenders use FICO credit scores to make lending decisions.

FICO offers many different types of credit scores. If you are taking out an auto loan, for example, a lender might check your FICO Auto Score. If you are applying for a credit card, a lender might look at your FICO Bankcard Score. If you don’t have much of a credit history yet, you can sign up for UltraFICO to have your banking activity factored into your credit score.

FICO regularly updates its credit scoring models to reflect changes in the industry and provide a more nuanced perspective of an individual’s creditworthiness, although these models can take some time to roll out. FICO recently released the FICO Score 10 suite, for example—but the FICO Score 8 model is still the most widely-used FICO credit score.

The FICO credit score ranges:

  • Exceptional: 800-850
  • Very Good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 300-579

VantageScore model

The VantageScore model was created in 2006 in a collaboration by the three major credit bureaus. Equifax, Experian and TransUnion created VantageScore as a way to provide an alternative to the FICO scoring model. Although VantageScore uses many of the same factors to determine your credit score, it weights these factors differently.

Under the FICO scoring model, for example, your payment history is the biggest factor affecting your credit score. Under the VantageScore model, your credit card balances and credit utilization ratio are the most influential factors in credit scoring.

Like FICO, VantageScore regularly updates its credit scoring models. The VantageScore 4.0 model, for example, became commercially available in 2017 and uses trended data to track changes in credit behavior over time. FICO’s Score 10 Suite also incorporates trended data into its credit scoring decisions—but VantageScore got there first.

The VantageScore credit score ranges:

  • Excellent: 781-850
  • Good: 661-780
  • Fair: 601-660
  • Poor: 500-600
  • Very Poor: 300-499

Other credit score models

FICO and VantageScore aren’t the only two credit scoring models out there. Equifax, for example, has created its own credit scoring model—and unlike the 300-850 point scale used by the most popular FICO and VantageScore models, the Equifax model uses a 280-850 credit score scale.

Other credit score providers offer credit scores that might sound unique, but are actually based on the FICO or VantageScore models. When you check your TransUnion credit score, for example, you’re actually getting a credit score based on the VantageScore 3.0 model. The personal finance app Mint offers “free Mint credit scores,” but these are also based on the VantageScore model—Mint hasn’t created its own credit scoring system.

Check the fine print to learn whether your credit score provider is using FICO, VantageScore or some other kind of credit scoring model. If you’re looking for a free credit score, try to pick credit score providers that use FICO or VantageScore.

Why do you get different scores from different credit bureaus?

Sometimes, one credit bureau might give you a different VantageScore or FICO credit score than the other bureaus. If you make a large purchase that uses a significant percentage of your available credit, for example, your credit score is likely to drop until you pay off your high balance. But it might drop more quickly with one credit bureau than with the other two.

Why? Because each credit bureau is continually adding new information to your credit file—but the three credit bureaus don’t always receive the same information at the same time.

So if you check your Equifax credit score on the first week of the month, your Experian credit score on the second week of the month and your TransUnion credit score on the third week of the month, you might get slightly different scores depending on how your credit activity has changed over the past three weeks.

There’s one more reason why you might have different credit scores with different credit bureaus. If one of your credit reports contains an error, it could affect your credit score. Since millions of Americans have errors on their credit reports, it’s a good idea to review your credit reports with each bureau on a regular basis and dispute any incorrect information you find.

How credit scores are calculated

Credit scores are calculated by analyzing the information in your credit report and assigning a numerical value to the data. This three-digit number reflects your credit history and the way you use credit. It also lets lenders know whether you are likely to be a credit risk. If you have a history of on-time payments, for example, your credit score is likely to go up—but if you start missing credit card payments, your credit score is likely to go down.

Here’s how FICO and VantageScore credit scores are calculated. Note that FICO weights each attribute by a specific percentage, while VantageScore merely identifies which attributes have the most influence on your credit score.

How FICO calculates your credit score

  • 35 percent—payment history
  • 30 percent—amounts owed
  • 15 percent—length of credit history
  • 10 percent—credit mix
  • 10 percent—new credit

How VantageScore calculates your credit score

  • Extremely influential—total credit usage, balance and available credit
  • Highly influential—credit mix and experience
  • Moderately influential—payment history
  • Less influential—age of credit history
  • Less influential—new accounts

How to check your credit score

There are many different ways to check your credit score. Many banks and credit card issuers provide free credit scores to account holders, and apps like CreditWise® from Capital One and Discover® Credit Scorecard will let you check your credit score even if you don’t have a Capital One or Discover credit card.

You can also sign up for a credit monitoring service. These services not only give you updated credit score information, but also track your credit report for potential signs of identity theft. Some credit monitoring options are free, while others come with a monthly or annual subscription cost.

You might even be able to access your credit score through a budget tracking app. Mint, for example, offers users unlimited access to their VantageScore credit score.

Here are some of the best ways to check your credit score online:

 

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Best Cash-Out Refinance Lenders In 2021

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Tapping into your home’s equity can be a smart move, whether it’s to lower high-interest debt, fund a home renovation, pay for college tuition or make progress toward another financial goal. One way you can accomplish this is through a cash-out refinance, in which you refinance your mortgage for more than what you owe and take the difference out in cash.

Many mortgage lenders offer cash-out refinancing, and Bankrate evaluated several to determine the best ones to consider. Here is our guide to the best cash-out refinance lenders in 2021.

Best cash-out refinance lenders

LoanDepot

LoanDepot has refinanced $179 billion in mortgages since its founding in 2010, with more than 200 branch locations across the U.S. serving borrowers in-person, online and by phone. For borrowers interested in accessing their home’s equity in cash, the lender’s cash-out refinance options include:

  • Conventional and jumbo cash-out refi
  • FHA cash-out refi
  • VA cash-out refi

When working with LoanDepot on a cash-out refinance, you can count on the lender’s “no steering” policy to get the best refinancing option for your needs. In addition, if you come back for a second refinance, you won’t have to pay any lender fees, and the lender will reimburse the appraisal fee as part of its “Lifetime Guarantee.”

Refinancing through LoanDepot can take 45 to 60 days, according to the lender’s website, and in a cash-out refinance, you’ll receive the funds one to three days after closing.

On the downside, LoanDepot doesn’t readily provide cash-out refinance rates through its website, so you’ll need to contact the lender to compare your options. The lender doesn’t offer home equity lines of credit (HELOCs) or home equity loans, either, which could be alternatives to a cash-out refi.

PennyMac

Founded in 2008, PennyMac has a range of loan options for borrowers, including cash-out refinancing for those interested in leveraging their home’s equity. The lender’s cash-out refi products include:

  • Conventional cash-out refi
  • FHA cash-out refi
  • VA cash-out refi

Both the FHA and VA cash-out refinancing options also apply to a non-FHA or non-VA loan if you’re interested in refinancing into an FHA or VA loan, according to the lender’s website.

Among its upsides, PennyMac advertises low cash-out refinance rates, which can make it easy for you to do side-by-side comparisons with other lenders. You can also take advantage of the lender’s refinance calculators and a home value estimator to get a better idea of how much equity you have.

While PennyMac already boasts competitive cash-out refinance rates, its “better rate promise” rewards you with a $250 gift card if you find a better offer from another lender. You’ll also benefit from the lender’s closing guarantee, which rewards you a $500 gift card if the lender causes the closing to be delayed.

PennyMac has no brick-and-mortar locations, however, which can be a disadvantage if you’re looking for an in-person experience.

Better.com

Better.com is touted for its 100-percent online process and speedy service. It has somewhat limited loan options compared to other lenders — no VA or USDA loans, for example — but its cash-out refinancing options include:

  • Conventional cash-out refi
  • FHA cash-out refi

What helps set Better.com apart is the ability to review current cash-out refinance rates on the lender’s website by simply inputting information about your home and your desired cash out. The lender also doesn’t charge lender fees, which can further save you money when you refinance.

Better.com was also named one of Bankrate’s best mortgage lenders overall and best online mortgage lenders in 2021, with fast preapprovals (in as little as three minutes), rate locks (in as little as 30 minutes) and closings sooner than the industry average, according to the lender.

Some drawbacks, however: Better.com isn’t available in every state, so refinancing through this lender might not be an option for some. There are also no branch locations.

Bank of America

If you’re looking for a more traditional lender for your cash-out refinance, consider Bank of America, the second-largest bank in the U.S. with thousands of branches throughout the country. In addition to other types of home loans and refinancing, Bank of America offers borrowers:

  • Conventional cash-out refi
  • FHA cash-out refi
  • VA cash-out refi

The bank was also named one of Bankrate’s best mortgage refinance lenders overall in 2021.

Current Bank of America customers enjoy some perks that others might not have access to. FHA and VA refinancing options are only available to current mortgage customers, for example, and customers enrolled in the bank’s Preferred Rewards could be eligible for an origination fee discount up to $600.

Bank of America’s interest rates are posted on its website for quick comparisons, but the bank doesn’t list lender fees online. Like other lenders, it also has a home value estimator so you can get a sense of what your home might be worth and what your cash-out options are.

New American Funding

New American Funding has proven to be a trusted mortgage lender, with an A+ Better Business Bureau rating and five out of five stars among Bankrate users. The lender’s cash-out refinancing options include:

  • Conventional and jumbo cash-out refi
  • FHA cash-out refi
  • VA cash-out refi

With a cash-out refinance through New American Funding, you can expect to receive your funds within three days of closing. Notably, the lender has flexibilities that some others don’t, making it an attractive option for bad credit borrowers. The lender was also named one of Bankrate’s best mortgage lenders for low credit borrowers in 2021.

New American Funding is available in all states with the exception of Hawaii, and brick-and-mortar branches can be found in many of them.

Fee information isn’t available on the lender’s website, but there are some rate offers advertised to the public. To initiate the cash-out refi process, you can call, request a quote online or apply in person.

Cash-out refinance requirements

To be eligible for a cash-out refi, you typically need to:

  • Have a minimum credit score of 620
  • Have a debt-to-income (DTI) ratio below 50 percent
  • Maintain a minimum 20 percent equity in your home following the cash-out (depending on loan type)

Who is cash-out refinancing for?

A cash-out refinance is best when interest rates are low, and for borrowers who meet the previously mentioned requirements and have specific goals for the funds they’re withdrawing. This includes those seeking to consolidate high-interest debt, complete home renovations or fund a college education.

Cash-out refinance vs. rate-and-term refinance

A cash-out refinance is different from a rate-and-term refinance, in which you lower the rate on your mortgage, change the length of the loan term, or both. A cash-out refi can also lower your rate, but it primarily involves withdrawing a portion of your home’s equity in a lump sum, which adds to the amount of your loan and increases the interest you’ll pay. Those funds can be used for a variety of purposes, such as a major home renovation.

Cash-out refinance vs. HELOC

A cash-out refinance isn’t the only way to tap your home’s equity. You can also pursue a home equity line of credit (HELOC).

With a HELOC, your first mortgage remains intact, but you’ll have access to a revolving source of funds throughout the HELOC draw period, which can be up to 10 years. You are only obligated to pay interest on the funds you withdraw during this period. Once the draw period ends, any balance must be repaid, usually over 15 or 20 years.

The advantages of a HELOC are that you’re only responsible for paying what you use, you can access the funds at any time and you won’t incur interest on untapped funds. However, HELOCs come with variable interest rates, which mean they change, and they could be higher than what you’d get with a cash-out refi.

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Pima Supes address eviction protections

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TUCSON, Ariz. (KGUN) — Economic fallout from COVID has cranked up concerns about evictions as tenants have trouble paying. There are Federal protections to reduce evictions in the pandemic but Pima County Supervisors are concerned about evictions that could bypass those safeguards.

Federal restrictions from the Centers for Disease Control restrict evictions if they could increase health risks in general— or the risk of spreading COVID because someone is put out of a home. Those protections are based on whether someone has trouble paying the rent.

Landlords and their lawyers spoke at this week’s Supervisors meeting. They say compared to keeping a tenant, an eviction is a loss for everyone. They want county rental assistance programs to move much faster to channel Federal grants to help tenants pay rent and help landlords cover their expenses.

Steve Huffman of the Tucson Association of Realtors reminded Supervisors tenants will still have to pay back rent and if they can’t it could hurt them long term.

“Many of them have huge judgments that will be issued against them eventually they will owe back rent for the time that they have not been paying rent, those judgments will create bad credit, and will interfere with future housing opportunities, and also future job opportunities.”

Tenants who create other problems beside non-payment or rent can still be taken to court and evicted.

But Pima Supervisors are concerned about reports of people evicted over questionable claims like a car parked in the wrong space or a toilet clogged too many times.

Chairperson Sharon Bronson says these eviction issues are focused by COVID but call for a broader look at how people become homeless.

“We are addressing basically the pandemic issues right now, but this may be, you know, an opportunity to just began the discussion about the larger discussion about homelessness and addiction down the road.”

Supervisors agreed to ask an existing task force on evictions during COVID to take a fresh look at eviction issues, especially in light of possible policy changes under the Biden Administration.



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Loans Bad Credit Online – PNC Personal loan 2021 Review | Fintech Zoom

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Loans Bad Credit Online – PNC Personal loan 2021 Review

Top perks

Low minimum loan amount

Customers can borrow $1,000 to $20,000. That minimum loan amount of $1,000 is unusual in the personal loan industry. A low minimum threshold means you can get the cash you need to cover small emergencies without being tied down to a larger loan.

Wide range of repayment terms

You have between 6 and 60 months to repay the loan. There are pros and cons to longer repayment terms, so this flexibility allows you to customize your term to your situation.. With PNC, you have the option of designing a repayment plan that fits your monthly budget.

Joint applicants welcome

Whether you need a joint applicant’s high credit score to qualify for a lower loan interest rate or someone has decided to co-assume responsibility for a personal loan, PNC allows for joint applicants.

What could be improved

Terms depend on location

The first thing you will be asked is where you live. On its loan homepage, PNC states that “PNC product and feature availability varies by location.” While this may be good news for borrowers in some areas of the country, it could be bad for others. You’ll need to see what it means for you.

Lowest interest rate reserved

If you’re looking to borrow enough to make repairs to your roof or buy a new furnace, you might not borrow enough to qualify for PNC’s lowest advertised interest rate. That’s because that low interest rate is reserved for those borrowing more money. For example, PNC will automatically assign a $5,000 loan a higher interest rate than a $15,000 loan.

Loans Bad Credit Online – PNC Personal loan 2021 Review

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