A New Look for Credit Scores

Photo of credit card on keyboard

hide caption 

iStock

This week, the three major credit reporting agencies announced a new way of calculating credit scores. The move is meant to give you a better understanding of how the score is determined, and how much credit you can carry.

The New Scale

The so-called 'VantageScore' more closely resembles an academic scale.

A - 901-990

B - 801-900

C - 701-800

D - 601-700

F - 501-600

 

Source: Experian, The Associated Press

Tips: Improving Credit Scores

Here are a few factors that affect your credit score and suggestions on how to improve your score over time.

Pay bills on time. Bills paid late, or worse, referred to a collections agency, will reflect negatively on your score.

Don't open new accounts before applying for credit. Inquiries into your credit history that occur when you apply for an account can lower your score. While having a credit history is a positive, opening too many credit card accounts can count against you. Pre-screened credit card offers — and routine checkups from credit reporting agencies, do not affect your score.

Reduce debt, but don't rush to close accounts. Closing accounts can actually reduce your credit score. Instead of closing accounts before applying for credit, you should...

Lower balances. Keeping balances close to your spending limit will typically reduce your credit score.

Source: Federal Trade Comission, Equifax

Guests:

Liz Pulliam Weston, author, Your Credit Score: How to Fix, Improve, and Protect the 3-Digit Number that Shapes Your Financial Future

Kerry Williams, group division president of Experian Credit Services; leader of Experian's team involved in creating the new credit scoring system

Bonnie Daniels, vice president of human resources at MiTek Industries, Inc., a software engineering company

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: