Struggling With Bad Credit? Vantage Score Could Be Your Answer
Ever since the 2008 financial crisis, many Americans, have been struggling with bad credit. With job loss, and housing foreclosures, millions have found themselves in a position where their credit scores are compromised, and based on the FICO credit scoring technique, are unable to recover a credit position. This is keeping millions of Americans from purchasing homes, and maintaining a car payment, which ultimately is hurting the economy. What If a new technique in scoring credit could increase accessibility to credit for borrowers?
Scoring Credit Differently Can Increase Accessibility To Credit
In the current FICO credit scoring model debts that go to collections, whether they are paid off or not, will reflect on an individual’s credit score for seven years. The New Vantage credit scoring model does not reflect a debt that has been sent to collections, if the debt was paid in full or settled. Meaning, as long as the current outstanding debt is at zero, the debt is forgiven in the eyes of lenders. This new method has the potential of opening up credit to millions who would have otherwise been denied. Not only that, it could drastically improve the housing market as more Americans become eligible to be homeowners.
Vantage Score Is Gaining Ground On FICO method Of Calculating Credit
While FICO is still the most widely used model for calculating credit scores, Vantage score is rapidly gaining ground. Vantage score is currently used by 7 out of 10 top financial institutions and 6 out of the top ten credit card companies. It is anticipated that it will continue to gain ground as it improves the borrowing scene for many Americans.
Do you think it is a positive or negative thing that Americans will have more access to borrowing money? The economic impact could reflect both positively and negatively. With greater access to borrowed money, it could definitely spur on economic growth. But, by loosening the constraints placed upon borrowers, we could see more loans default and more home foreclosures in the future. In many ways it is a double edged sword. If you have been a victim to foreclosure or any of the major economic problems that have faced Americans the last several years, your chances for recovery may be significantly improving. For more suggestions on how to get back on your feet financially speak to a Redhawk Financial Advisor today.