Credit scoring started in the late 1950’s to support lending decisions in large department stores.  The concept was revolutionary and by the end of the 1970’s most of the nation’s largest commercial banks, finance companies, and credit card issuers used credit scoring.  It became widely accepted once Fannie Mae and Freddie Mac fully endorsed the use of the FICO score for home mortgage lending.

At the same time FICO started developing customized scoring models for each individual credit bureau.  Today each bureau still has their own specific FICO designed score.  Which is one of the reasons why you will very seldomly see all three of your credit scores be exactly the same at the same time. Equifax commonly names their score model BEACON.  Experian many calls their model Experian/ Fair Isaac Risk Model.  And Trans Union has named theirs simply FICO.

Even though the bureaus have their own FICO models, in 2006 they decided they wanted a bigger piece of the pie and announced their intent to design their own credit scoring model.  Today that model is known as Vantage Score and is offered on the credit monitoring sites owned by the credit bureaus.  The intent of the bureaus is to have Vantage Score widely accepted by lenders to eventually replace the FICO score.

The Vantage Score

Even though the bureaus have their own FICO models, in 2006 they decided they wanted a bigger piece of the pie and announced their intent to design their own credit scoring model.  Today that model is known as Vantage Score and is offered on the credit monitoring sites owned by the credit bureaus.  The intent of the bureaus is to have the Vantage Score widely accepted by lenders to eventually replace the FICO score.

Vantage score is VERY different than FICO.  For one, FICO’s credit scoring scale ranges from 350-850 while Vantage ranges from 500-990.  This is a BIG difference in credit scoring and can be very confusing to consumers and lenders.  A 700-credit score with FICO is “A” credit, but with Vantage a 700 score would be classified as “D” or poor credit.

There are also many different algorithms used by the FICO depending on why a credit report is being pulled, an example maybe someone looking to open a $1500 Revolving Account with a department store is going to get a much different score than if they are applying for a $35,000 car loan, simply because of the type of account which is being applied for.

And those “free” credit score offers should not be looked at as anything but a possible trend of how your scores is going due to the fact that when you are looking at those sites and requesting your score(s) you are not even applying for anything, so there is no risk calculation used in that particular algorithm. Stick with a TriMerge Mortgage Credit Report for the most accurate FICO scoring for yourself.

Across all media platforms today you will find credit myth information on almost any topic or subject, but sadly, much of the information concerning credit is inaccurate.

Here are some common credit myths being thrown about:

Credit Myth 2: “It will take you seven years to improve your credit.”

This is one of the widespread credit myths. In actuality, it’s an ongoing process to improve one’s credit. It doesn’t take a certain amount of time. Most negative items will remain on your credit report for up to seven years, as long as they are accurate, can be verified, the credit bureau and creditor reporting the item can and will provide the appropriate validation of the debt and the debt actually occurred within that period of time being reported.

Of course, many items are NOT accurately reported and are not verifiable, therefore they can and should be removed.

Regardless of whether or not individual line items can be corrected or deleted, though, you can start to improve your credit. It can be done by maintaining a positive payment history, maintaining lower balances, and low utilization rates on your credit cards. It can also be done by establishing new accounts to get your new payment history going smoothly again.

Credit Myth 3: “A serious financial crisis like a foreclosure or bankruptcy permanently hurts your credit score.”

Foreclosures will remain on your credit report for seven years, Bankruptcies can linger for seven to ten years: this is entirely dependent upon how the bankruptcy gets filed. Chapter 13 will remain for seven years, whereas Chapter 7 will remain for a decade. Note, however, that the actual bankruptcy in the public records section will remain there for ten years either way.

One must remember that the reporting of a Foreclosure or Bankruptcy on a credit report must meet the same criteria that any other item must meet in order to stay on a person’s credit report and that is that all reported information pertaining to that foreclosure or bankruptcy be reported accurately and be able to be verified and validated by both the party reporting the item and the party recording the item.

Absent of that verification and validation the item must be removed from the credit report regardless of when it originally took place.

The important take-away point is that although these are certainly long periods of time, it’s not permanent, and there are many things you can do after a financial crisis to reestablish your credit and get your credit back on track.

These are just a few of the Credit Myths you find today reported online, on TV, and published on Social Media and other news outlets. Don’t be fooled, you can take control of your financial and credit future by handling your current finances responsibly and demanding your rights under the law that ALL information that is being reported about you be 100% accurate 100% of the time.