VantageScore vs FICO: Differences, Methods, Ranges

  • Raise Credit Score

Credit scores were created for the benefit of the lender, not the consumer. They tell the lender whether a loan applicant is trustworthy and reliable, or risky and irresponsible. But these scores can also be used by the consumer to better understand how lenders perceive them.

Every consumer has a credit score, a specific number tied to their activity and their history, and this can be found on an individual’s credit report. It’s designed to be simple for both parties and to provide a quick and convenient way to determine an individual’s creditworthiness and monitor their financial situation.

However, individuals are often confused by the fact there are multiple credit reporting agencies and two major credit score algorithms. With that in mind, let’s look at how VantageScore and FICO Score compare and detail how these two credit scoring services operate.

FICO Score

Fair Isaac created the FICO Score in the 1980s (FICO originally stood for Fair, Isaac and Company, but the organization has since changed its name to Fair Isaac Corporation). In the mid-90s, it was used by both Freddie Mac and Fannie Mae during the mortgage application process and before long it became the gold standard of credit scoring systems.

The FICO Score remains the most common credit scoring system and is used by banks, credit card providers, and other lenders. The score is generated by a credit report, which is processed by one of the leading credit bureaus, and can differ from report to report due to the variances in how information is processed by different bureaus.

FICO Scores generally range from 300 to 850, with 300 being the lowest/worst and 850 being the highest/best. There are other variants of the FICO Score used, including the FICO Auto Score, which has a range of 250-900, but the Classic/General FICO Score is the one that most consumers are familiar with.

According to a 2019 report, the average score is 706, which is considered “good”. Anything below 620, however, is considered “bad”, and countless American consumers are struggling with such a score.

VantageScore

The VantageScore credit scoring system was established as a joint venture between the three leading credit bureaus (TransUnion, Equifax, and Experian). It was launched in 2006 under the name VantageScore Solutions, LLC, which is owned by the aforementioned companies.

VantageScore was created to standardize credit scores across the main bureaus. There have been several iterations of the scoring system since its launch, with VantageScore 3.0 being the most popular and widespread (there is a VantageScore 4.0, but 3.0 remains more common).

Unlike previous versions, VantageScore 3.0 adopted the same scoring range as FICO (300-850), thus simplifying the process for consumers.

VantageScore vs FICO: The Algorithms

Your credit score is calculated based on a variety of factors and is ever-changing and readily accessible. The two credit scoring systems use similar algorithms to generate your score, but with a few slight differences.

A FICO Score is calculated based on the following parameters:

  • 35% Payment History
  • 30% Debt vs Credit
  • 15% Credit History
  • 10% Types of Credit
  • 10% New Accounts

Read the following guide for more in-depth information on how a FICO Score is calculated.

As for VantageScore, it is calculated (roughly) as follows: 

  • 40% Payment History
  • 20% Age/Type of Credit
  • 20% Credit Utilization
  • 10% Credit Balances
  • 10% Recent Credit

At first glance, these two algorithms seem vastly different and there are certainly some areas where that is the case. However, they are both heavily reliant on Payment History, which is determined by whether or not you meet your monthly repayments, and Credit Variety/Age.

VantageScore includes Credit Balances and Credit Utilization, which is rarely mentioned with regards to a FICO Score. However, these two factors are basically the same thing as the Debt vs Credit. In Debt vs Credit, for instance, your FICO Score will look at how much credit you have available versus how much of this is being used, which is also known as Credit Utilization.

Benefits of VantageScore versus FICO Score

There are some key areas in which VantageScore differs from FICO Score and the main one affects consumers with very little credit history. With a FICO Score, you generally need to have at least 6 months of processable data before you will be given a score. With VantageScore, you may be given a score with just 1 account being active for just 1 month.

VantageScore is more willing to ignore collections that have been paid in full. This is also true for some new models of the FICO Score, but many older models are still in use that do not dismiss collections so easily.

VantageScore versus FICO Score: Which is Better?

VantageScore was created by credit bureaus, who it’s fair to say have a lot of experience when it comes to collecting, organizing, and reporting on financial data. It was designed to make their lives easier and to give lenders a more accurate and reliable score, while also giving consumers a little more consistency.

However, both VantageScore and FICO Score take the same things into consideration and provide very similar results. It’s rare for a consumer to have a good VantageScore and a bad FICO Score, or vice versa. In fact, unless there has been a major oversight or mistake, this simply won’t happen.

The Future of Credit Scoring Systems

We mentioned that VantageScore has undergone several transformations over the years, including a notable shift towards the same scoring range used by FICO. But FICO is also constantly evolving and improving. It adapts to changing trends and is constantly looking at ways to improve its accuracy and reliability.

Both of these scores will likely be around for many years to come and will no doubt experience a number of evolutions in the next decade or so. But regardless of how many times they change and how many iterations we see, the principle will remain the same: Extensive credit histories and minimal debt will generate good scores; extensive debt and minimal credit histories will generate bad scores.

Source: pocketyourdollars.com

Dear Penny: How Can I Find My Forgotten 401(k) Money?

Dear Penny,

I got married in 2009. At the time, I was living in Florida and then decided to move to Germany. The marriage and moving preparation were tumultuous and fast. I have had jobs in different companies, some smaller and others of medium sizes, but I don’t recall if they provided a 401(k) plan. I made no arrangements to transfer the money to another retirement account. 

I didn’t leave any family or contact in the U.S. Now I am living in the U.S. again. Is it possible to get information on this kind of lost retirement money?

-C.

Dear C.,

As an admitted scatterbrain who’s notorious for losing just about everything, I’m pleased to say I have yet to lose a retirement account. But it’s surprisingly easy to do.

People move and change jobs way more frequently than they used to. A March 2018 survey by Boston Research Technologies found that at least 3 million people in the U.S. have missing 401(k) plan money. About one-third of those people are unaware that they even had a retirement account with their old employer. If you were preparing for a whirlwind marriage and a move across the globe, I get why following up on retirement money you weren’t sure even existed wasn’t top of mind.

If you do have 401(k) money, it’s in one of three places: It’s still in your former employer’s plan, it’s in an IRA that was created on your behalf, or it’s in state hands.

Let’s start with the state. That’s where your money would probably be if your balance was less than $1,000. Many plans send you a check to your last known mailing address when they can’t find you and your account has under a grand. After the check goes uncashed for a certain amount of time, typically a year, it goes to the state’s unclaimed property division.

That’s also where your money would likely wind up if the company closed and terminated its plan and you didn’t take action to roll it over. You can hunt for unclaimed property by searching your name on unclaimed.org and clicking on any states you’ve lived in, or MissingMoney.com to do a nationwide search.

You could also find abandoned deposits, refunds or bank accounts just waiting to be claimed. (In fact, Yours Truly was elated to discover a forgotten $81 water deposit on unclaimed.org a few months back.) If you find missing money, you’ll fill out a quick form and you could get your money within a few weeks.

Next, make a list of your past employers and find out who administers their plan. You can search for a current company’s administrator using FreeErisa.com. If the company terminated its plan — for instance, if it closed or was acquired — you can use the U.S. Department of Labor’s Abandoned Property database to find the proper contact. Once you find the administrator, they can tell you whether you have money lying around.

The best-case scenario here is that you have forgotten money and it’s still invested in your old employer’s 401(k) plan. Not only would you get a nice windfall, but your money would have been generating returns for all these years. You could roll it over to an IRA without getting hit with a big tax bill.

The next-best scenario is that your old employer rolled over your account into a special IRA on your behalf. This commonly occurs when your company can’t locate you and your balance is between $1,000 and $5,000, or it’s closing its plan. You wouldn’t owe taxes, but your money would be invested in something super low-risk, like a money market fund, and barely earning enough to keep up with inflation.

The worst-case scenario is that they cut you a check. Not only will you likely have a surprise tax bill to go with that surprise windfall, but your money hasn’t been earning a cent in state hands.

If you do find retirement money that’s in a 401(k) or an IRA that was set up for you, I’d recommend rolling it over to an IRA. It’s much simpler to keep track of your money when it’s all in a single place. Check in on it at least twice a year to make sure that your contact information and beneficiaries are up to date.

We can’t change the past, so I’m not going to spend too much time lecturing you. But if you’re still working and (hopefully) saving for retirement, here are two things I want you to take away.

First, you’ll get the best outcome when you pay attention to your money. It’s essential to know how much you’re saving and earning, and what the tax consequences are.

And secondly, a 401(k) is a great benefit. Just as you wouldn’t take a job without knowing the salary, know what your retirement benefits are before you accept an offer.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].

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Source: thepennyhoarder.com

The Best Apps on the Market to Learn About Your Credit – Lexington Law

Credit.com is owned by Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.

It’s difficult to stay on top of your credit score even during the best of times, and it only gets harder during times of financial crisis. While you may be able to regain ground on your credit card debt or mortgage loan after a missed payment, your credit score will take a hit. Even after you’ve gotten control of your finances again, the damage to your credit score will take quite a while to recover from. 

It’s important that you not only track your budget, but also closely monitor your credit score and take advantage of any opportunity to build credit. To assist you, we’ve researched different credit score management apps that can support your credit in a variety of ways. Some provide credit monitoring, opportunities for improving your credit score, credit protection and support for credit repair. 

Here’s our list of the most secure, easy-to-use and beneficial apps for managing your credit score.

Extra Credit is a brand new offering from Credit.com just launched to the public, but we are excited about its features. Those features include “Reward It,” which awards you funds when you are approved by a qualified lender through Extra Credit. 

Additionally, when you sign up for Extra Credit, you get access to the 28 most commonly used FICO® scores as well as your credit reports from all three bureaus and recommendations for credit cards based on your credit profile. Finally, Extra Credit provides you $1,000,000 in ID theft insurance, dark web monitoring and access to a third party service that reports your monthly rent and utility payments to the bureaus.

Unlike many of the apps on this list, however, Extra Credit is not a free service.

Experian allows you to monitor your Experian credit report and your FICO credit score, manage disputes with Experian and be aware of any new credit activity. Experian’s mobile app also comes with the Experian Boost feature, which allows you to report payments to the credit bureaus that would not usually be reported—such as cell phone bills and utilities—and potentially improve your score. 

Experian’s app provides services that you can use to improve, monitor and repair your credit. Keep in mind that these services are specific to your credit history as managed by Experian, one of the three credit bureaus that track your credit history. Although Experian allows you to look at your FICO score—the credit score that most lenders use—it doesn’t allow you to manage the credit reports compiled by TransUnion or Equifax.

The FICO credit scoring method is the most popular method among lenders for calculating credit scores. MyFICO allows you to see and manage the score that your lender will most likely consider when you apply for a mortgage or an auto loan. 

MyFICO also allows you to view your updated credit reports from all three bureaus—Experian, Equifax and TransUnion. Additional features included are a credit score simulator, which allows you to see how possible actions could affect your score, credit monitoring, and credit education resources. 

MyFICO is a good choice for users looking for a credit monitoring service, but it does not provide as many resources as other apps to assist with credit score improvement or repair.

Mint predominantly focuses on budget management, but it also offers tools for monitoring your credit score and weighing it as a factor in your financial decisions. You can view your VantageScore credit score and TransUnion credit report in the app. Additionally, you can personalize alerts to stay up to date with any changes to your credit score or potential fraud or identity risks.

Mint offers more resources for setting financial goals, managing your budget, and keeping track of bills than it does for directly managing your credit score. It can be used as a credit monitoring tool, but bear in mind that you will only be able to see your TransUnion credit history.

The TransUnion app works in tandem with your TransUnion Credit Monitoring Account. It allows you to monitor your credit score and TransUnion credit report, both of which are updated daily. The TransUnion app also offers Credit Lock Plus, which allows you to “lock” and “unlock” your TransUnion and Equifax credit reports. In addition, TransUnion provides identity theft insurance.

The app will only allow you to see your TransUnion credit report and manage the credit score based on your TransUnion credit history. It will not give you a complete picture of your credit history.

Lock & Alert is good for protecting your credit activity through Equifax. It allows you to easily “lock” and “unlock” your credit report—a much easier process than requesting a freeze be placed on your account, or lifting a freeze. 

The Lexington Law app works in tandem with your online account, allowing you to stay up to date with recent developments on your case while on the go. Lexington Law has one of the few credit management apps that allows you to view your credit history from all three credit bureaus, giving you the most complete snapshot of your credit. You can track any credit disputes currently in progress, see your most up-to-date FICO credit score and set up personalized alerts. Lexington Law also provides identity theft insurance and identity theft alerts. 

Although the Lexington Law app is free to download, you will need to pay to set up an account in order to use it.

Apps to Improve Your Credit Health

As you can see up above, different apps have different strengths. Your financial situation is unique, and the app that you choose will depend on your circumstances. However, each of the apps we have listed above will allow you to be more engaged in managing your credit score. Your credit is not beyond your control—there are resources available to you that can help you protect, build and repair your credit. 

If you’re trying to be more engaged in managing your credit or need help knowing where to start, contact our experienced credit consultants.


This article was reviewed by Daniel Woolston, an Assistant Managing Attorney at Lexington Law Firm. This article was written by Lexington Law.

Daniel Woolston is the Assistant Managing Attorney in the Arizona office. Mr. Woolston was born in Houston, Texas and raised in Sugar Land, Texas. He received his B.S. in Political Science at Brigham Young University and his Juris Doctorate at Arizona State University. After graduation, Mr. Woolston worked as a misdemeanor and felony prosecutor in Arizona. He has conducted numerous jury trials and hundreds of other court hearings. While at Lexington Law Firm, Mr. Woolston dedicates his time to training paralegals and attorneys in credit repair, problem solving, and ethical and legal compliance. Daniel is licensed to practice law in Arizona, Oklahoma, and Nevada. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

What is Financial Profiling?

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

FICO, the company that created the credit scoring system most often used by bankers, reports that your credit score is defined by five simple factors:

  • Repayment habits
  • Credit card utilization
  • Length of credit history
  • New credit acquisition
  • Account type diversification

Although those facts are known, a less publicized force also has the power to influence your creditworthiness: financial profiling.

It’s no secret that your credit score is partially based on how you spend, but is it affected by what you buy? When it comes to financial profiling, the answer is yes. Despite consumer outrage and FTC criticism, such factors are sometimes used by credit card companies to assess client behaviors and overall risk. Such creditors may decide to reduce limits based on profiling information they identify.

Financial profiling comes with a slew of implications and consumer consequences:

  • Assumptions. Creditors using financial profiling tactics sometimes draw harsh conclusions about what you buy. Excessive spending on travel, entertainment, and even healthcare costs could result in lower credit limits. Why? Creditors may view these expenses as frivolous or at risk for non-repayment. Whatever the reason, assumptions play a vital role in financial profiling and creditors’ resulting actions.
  • Grouping. Consider the following scenario:

You and your neighbor are both in the market for a motorcycle. You decide to shop together and end up purchasing bikes from the same pre-owned dealership. Despite a high credit score, you realize shortly after your purchase that your credit limit has been reduced by $1,000, but you have no idea why.

While this scenario may be a bit dramatic, the practice of grouping consumers is a common component of financial profiling. Creditors may choose to consider your spending and repayment habits alongside others who have shopped in the same places and bought similar items. If you bought a motorcycle from a dealer whose customers are notoriously delinquent spenders, you could be marked with the same red paint.

  • Credit damage. A reduced credit limit is more than an inconvenience. In fact, it can actively damage your credit score by affecting your utilization ratio. Credit utilization is measured based on the amount you currently owe vs. your total credit limit. For example, if Marshall has a credit credit card with a $2,000 balance against an overall credit limit of $20,000, then his ratio is 10 percent. Your credit utilization ratio should never exceed 25 percent. If Marshall fell victim to financial profiling and his credit limit was reduced to $10,000, his utilization ratio would automatically rise to 20 percent, putting him at risk for unbalanced debt utilization.
  • Unfair practices. You are probably thinking, “What gives a creditor the right to judge my spending habits?” Countless people are asking the exact same question. Although creditors have access to your personal spending information, do they have the right to analyze it without your knowledge even if you’ve proven to be a reliable customer? Further, is it fair to make account changes based on a list of recent purchases?

While these practices are not often acknowledged, it seems clear that financial profiling can be a significant factor in creditor business practices. If your credit limits are taking an unprovoked nosedive, call your creditor and ask for a written explanation. Contact the FTC for help if they cannot provide the information you seek. Credit is a choice, and you should never be forced to settle for an unfairly damaged credit score.

Source: lexingtonlaw.com

Managing Your Tax Return (What You Should be Using it For)

Spending Your Tax ReturnWhen people receive their tax returns, they are quick to spend this money on frivolous purchases that may bring them temporary joy. Even though people know there are ways to spend their tax return responsibly, the temptation to splurge on things they don’t need is too strong.

Ultimately, you can spend your tax return on whatever you want, but you should really consider what you should be using it for.

Pay Down Debts

Between student, home, and auto loan and credit card debt, people can easily find themselves owing thousands of dollars. Consumers often have no choice but to pay down their debts little by little over time, but if it is possible to make an extra payment or two using your tax refund, the debt can be repaid much faster.

Keep in mind that it would be most helpful to pay down your debts based on interest. High-interest rates should take priority since they are the most expensive. If you pay them down sooner, you will save money because you can shorten the repayment period and pay less interest.

Start or Add to an Emergency Fund

How prepared are you for the unexpected? If your car needed a major repair tomorrow, would you have the money to cover the cost? When emergencies happen people need to be prepared if they don’t want to take a big financial hit.

Emergency funds are designed to cover the cost of the unexpected. If you don’t have an emergency fund, use your tax refund to start one. And if you already have one, add to your fund. If and when something happens, you don’t have to stress about how this unexpected expense will set you back because you’ll have a financial safety net in place. 

Retirement Savings

The traditional age of retirement is 65, although some people may choose to retire earlier than that.  Your retirement may not be in the near future, but it is never too early to start saving for this phase of your life.

Just because you are retired, doesn’t mean you won’t have expenses. Between rent or mortgage payments, gas, food, utilities, and other monthly expenses, you will need to have a lot saved up since you will no longer be working. The money you save over the years will add up, so allocating some of the funds you receive from your tax return for your retirement savings will only help future you.

Home Improvements

Homeowners are responsible for their own home maintenance and improvements. It is a well-known fact that maintaining a home can be costly. Landscaping your front yard, insulating your attic or remodeling your kitchen may all be on your list of things to do, but with the cost of these home improvements being high, you haven’t been able to afford either.

Your tax return, regardless of how small or large it is, can be used to create the home you deserve. Even if you can’t tackle all of your projects at once, getting one done is better than none. Additionally, consider using the money to start a home improvement fund that can be used specifically for any home expenses you may have in the future.

Donate

Not everyone considers how they can help someone else. And when they do, they may focus on material items, such as clothes and shoes, but if there is an organization that you would like to support, why not make a monetary donation? You’ll feel good about having helped those in need, but another bonus to donating is that depending on the donation, it is tax-deductible.   

People view their tax return as free money that they can throw away. If there is work that needs to be done to improve your life or financial health, this money shouldn’t be wasted. When you receive your tax return, consider the many responsible ways to use this money that can positively impact your life.

Unhappy with your credit score or financial situation? Give Credit Absolute a call today for a free consultation!

Source: creditabsolute.com

Credit Card Interest Calculator

  • Credit Card Debt

On this page you can find a credit card interest calculator. We’ve also included some information about card interest to better assist you.

How to Calculate Credit Card Interest

To calculate how much credit card interest you’ll pay without using our credit card interest calculator, follow these three simple steps.

Change the Annual to the Daily

The APR, or Annual Percentage Rate, describes how much money you will pay every year. Credit card suppliers are required by law to disclose this rate as it allows consumers to compare. However, they often charge on a periodic basis, such as every day or month.

To calculate this rate, you simply need to divide the APR by 365. For example, let’s assume the rate is 20%. 0.20 ÷ 365 = 0.00054%.

Figure Out Your Daily Balance

The next step is to use the figure above and multiply it with your average daily balance. Assuming that balance is $1,000 and the APR is 20%, that creates a total of $0.54. 

Multiply by Billing Period

If there are 30 days in your billing period, as is often the case, then the next step is to multiply the total ($0.54) by 30, which gives you a total of $16.2.

You also have to factor in compound interest, which is where it gets a little more complicated. Simply put, compounding is when interest is added to your unpaid balance, which basically means you’re paying interest on interest.

How Are Interest Rates Set?

Interest rates can be standard, which means they apply the same for every applicant, or user-specific, which means they will be higher for those with a bad credit score and lower for those with a good one. Generally speaking, the better your credit is, the lower the APR will be.

It’s important, however, that you shop around. Credit card companies are there to make a profit and the higher the rate is, the higher their profit will be. Don’t assume that they are offering you the best rate that you can get and see what their competitors have to offer before you agree to anything. 

Will I Always Pay Credit Card Interest?

Credit card interest is only charged on the balance that you don’t pay. For example, let’s imagine that you have a credit limit of $10,000 and a billing cycle of 30 days. If you spend $5,000 during that cycle and then repay $5,000 at the end, you won’t be charged a cent in interest.

If, however, you leave this amount until the following cycle then you will be charged interest for that billing period. It’s also worth noting that interest rates are different depending on whether you’re withdrawing cash, making a purchase, or initiating a balance transfer. There are also fees and charges that may still be applicable even if you pay off your balance every month.

If you don’t clear your balance every month and instead try to put as much money down as you can, you should consider paying two or three times a month instead. This will reduce your average daily balance, which in turn will reduce the interest that you pay. Instead of repaying $1,500 every 30 days, consider repaying $500 every 10 days.

Are Reward Cards Better?

Generally speaking, reward cards have higher interest rates than standard credit cards. They entice you in with offers of cashback and airmiles, only to trap you with a high APR that can be difficult to escape from. These cards do serve a purpose for consumers who clear their balances every month, but if you’re planning on using that credit over the long-term, you should avoid these cards.

The card that is best for you will depend entirely on your current and future financial situation. If you spend big and clear balances, reward cards are fantastic; if you’re looking to move debt, balance transfer cards are better; if your goal is to accumulate debt, ignore the perks and focus on the lowest APR.

I Paid My Balance, so Why Was I Charged Interest?

This can happen for a few different reasons. It may be that the interest accumulated during a previous month but more often than not it’s because of cash withdrawals. When you withdraw cash from an ATM using a credit card you are charged a fee that can range from 2% to 5%. You are also charged interest on that withdrawal and this interest is often charged from the very first day.

If you were charged a cash withdrawal fee and interest without actually withdrawing any cash, it could be the result of a “cash-like” transaction. These transactions occur just like any other, only your provider registers them as cash withdrawals, which means they charge fees and interest.

The following transactions may be recorded as cash transactions and charged fees and interest:

  • Gambling Transactions: Gambling is becoming more common and widespread in the United States, which means more consumers will be stung by cash withdrawal fees. Any time you purchase casino chips or lottery tickets, it may be recorded as a cash advance. This may even apply to food and drink purchased at a casino.
  • Gift Cards and Money Orders: Credit card providers consider these products as “cash like”, because they can be used to make purchases in place of cash.
  • Foreign Currency: If you can, use cash or debt to purchase foreign currency as you may be stung with additional fees if you use a credit card. The same applies when you purchase traveler’s checks using your credit card.

Credit Card Checks: Many providers send consumers checks they can use to withdraw cash from their credit card. It may be tempting to use these in times of need, but unless you want to be hit with high feeds, you should abstain.

Source: pocketyourdollars.com

Amazon Prime Store Card Offers 5% Back

[UPDATE: Some offers mentioned below have expired and/or are no longer available on our site. You can view the current offers from our partners in our credit card marketplace. DISCLOSURE: Cards from our partners are mentioned below.]

Amazon.com offers several credit cards for its customers, but one of its best is the Amazon Prime Store Card. Offered through Synchrony Bank, the Amazon Prime Store Card combines a hefty 5% back offer with promotional financing options for orders starting at $149.

If you already have Amazon Prime and routinely make big purchases on the site, the Amazon Prime Store Card could make your shopping life easier while rewarding you with a decent rewards rate.

How Does the Amazon Prime Store Card Work?

You’ve undoubtedly encountered other store credit cards through traditional brick-and-mortar retailers. You usually get a discount when you sign up, as well as exclusive offers or rewards. These cards are best for customers who don’t carry a balance on their card every month and who frequently shop at a specific retailer.

The Amazon Prime Store Card works the same way as traditional store cards, with some defining extra features. Namely, you have to subscribe to Amazon Prime to be eligible. Non-Prime Amazon customers can get the Amazon.com Store Card and access promotional financing offers, but they won’t get 5% back.

If you already have the Amazon.com Store Card, a Prime subscription will automatically upgrade you to the Amazon Prime Store Card. You also get an Amazon gift card loaded onto your account when you sign up for the card. Remember that because this is a store card, you can use the card only at Amazon.com. In other words, you can’t use it at restaurants, gas stations, or drugstores—or anywhere else for that matter.

Once you have the Amazon Prime Store Card, you immediately get 5% back on every Amazon.com purchase, which means you get back 5% of the purchase’s value in rewards points. You can cash out points on Amazon directly—if you have rewards available, Amazon will give you the option to apply them at checkout.

How Does the Promotional Financing Work?

The promotional financing kicks in on orders of $149 or more, and you don’t need the Prime card specifically to access them. Promotional financing is the main benefit of Amazon’s regular Amazon.com Store Card. But if you’d rather have the Prime card for the extra 5% back on purchases, you still get the financing features.

Amazon has 6-, 12-, and 24-month financing offers with zero interest, as long as you pay off the item completely within the allotted timeframe. This is important, because if you don’t complete all your payments, Amazon will charge you interest accrued from the date of purchase at a variable APR of 26.99%, completely voiding the zero-interest offer.

Amazon Store Card Financing Offers:

  • Interest-free 6-month financing: orders of $149 or more
  • Interest-free 12-month financing: orders of $599 or more
  • Interest-free 24-month financing: select items sold by Amazon

Keep in mind, you can’t get 5% back and promotional financing on the same order—it’s one or the other.

Other Credit Cards with Amazon Savings

The Amazon Prime Store Card isn’t the only credit card out there that will get you rewards with Amazon.com. Amazon and other providers have several options that will make your online purchases work for you—and we cover five of the best credit cards for Amazon purchases below.

1. Amazon.com Store Card

As we’ve mentioned, Amazon with Synchrony Bank offers the Amazon.com Store Card. This card gives you the same promotional financing offers as the Amazon Prime Store Card, but it does not require a Prime membership.

You miss out on the 5% back, but if you make big purchases on Amazon, those financing offers can still prove useful.

2. Amazon Rewards Visa Signature Card

The Amazon Rewards Visa Signature card from Chase Bank has a lower rewards rate than the Amazon Prime Store Card, but it makes up for it with the ability to shop anywhere. This card gives you 3% back on Amazon.com; 2% back on everyday purchases from drugstores, restaurants, and gas stations; and 1% back on everything else.

With no annual fee and no foreign transaction fees, this card is a great everyday and travel card for frequent Amazon shoppers.

3. Amazon Prime Rewards Visa Signature Card

Also from Chase Bank, the Amazon Prime Rewards Visa Signature Card is similar to the Amazon Rewards Visa Signature Card but with two main differences:

  1. It offers a higher, 5% back rate on Amazon purchases.
  2. It requires a Prime membership.

Just like the Amazon Rewards Visa Signature Card, you get 2% cash back at drugstores, gas stations, and restaurants and 1% cash back on everything else. And you still don’t have to worry about foreign transaction fees or an annual fee.

This card is similar to the Amazon Prime Store Card, except it can be used anywhere and offers rewards at more places than just Amazon. However, you don’t have access to any financing offers.
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4. American Express SimplyCash Plus Business Credit Card

If you’re looking for a decent Amazon business credit card, this could be an option. The SimplyCash Plus Business Credit Card from American Express gives you 5% cash back on purchases from US office supply stores. And guess what? Many US office supply stores sell Amazon gift cards. If you’re fond of the Amazon 5% back rate and make frequent purchases at office supply stores for your business, the SimplyCash Plus Business Credit Card can give you the same cash back rate as an Amazon rewards card, plus office supply store rewards. Along with no annual fee, this card offers a decent 3% cash back rate on a category of your choice (from a list of eight). For everything else, you get 1% cash back.–>

4. American Express Blue Cash Preferred Card

American Express’s Blue Cash Preferred Card gives you a whopping 6% cash back on up to $6,000 a year for purchases at U.S. supermarkets. Just like office supply stores, many U.S. supermarkets sell Amazon gift cards, which would allow you to get an even better cash back rate than an actual Amazon rewards card. (Click here for rates and fees.)

The rewards rate for supermarket purchases drops to 1% cash back after the $6,000 annual limit, so keep that in mind as you make your purchases. You’ll also have to pay an annual fee of $0 introductory annual fee for the first year, then $95. . But in addition to the 6% cash back rate for U.S. supermarkets, you’re entitled to 3% cash back at U.S. gas stations, as well as 1% cash back for any other purchases.

Before you apply for any credit card, you should know your credit standing so you can determine which credit cards best fit your credit range. Get your credit scores for free on Credit.com. They’re updated every 14 days so you always know where you stand.

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Source: credit.com

How And Why To Check Your Credit Score If You Plan On Buying A House

My wife and I have pretty good credit. We’ve never missed a payment on any of our debts, have had a variety of credit types (installment loans, mortgages and credit cards) and the cards that we do still have, we’ve had for years.

We’re not too concerned about having a good credit score these days because we don’t really use debt that much, we pay cash for most things.  There is one thing that we DO need a good credit score for, however, that may be happening within the next year or two. Buying a house.

When buying a new home it is important to stay on top of your credit situation as your credit score can have a huge impact on what rate, and what type of loan you can get.  In the end it can save or cost you thousands of dollars. So today I thought I would do a quick review of why it’s important to stay on top of your credit when looking for a home loan, and how to do it in a way that doesn’t cost you very much.

credit score impact on mortgage rate

credit score impact on mortgage rate

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myFICO.com.

Let’s say you are you seeking a 30 year fixed loan for $250,000 to pay for a new house.  Depending on your credit score range the rate that you get can vary pretty widely.

Credit Score Impact On Mortgage Rate

Credit Score Impact On Mortgage Rate

Even if you have a good credit score, and not an excellent score, you’re losing out on thousands of dollars in interest.  Boosting your credit score to the excellent category would save you an additional $11,107 in interest!  Going from an average or poor credit score to a higher credit score range could save you even more!  So be aware of where your credit score is, and do your best to improve your score!

What Is A Good Credit Score?

What a good credit score is can vary a bit depending on who you ask, but in general it’s safe to say a good FICO credit score is going to be anything above a score of 700-720. In the 680-700 range, you’ve got average credit. If your score is 620 or below you’ll most likely be tagged as a poor credit risk.  Here’s a general look at the credit score ranges.

Credit Score Description
750-850 Excellent credit.
680-749 Good credit.
620-679 Average credit.
560-619 Poor credit
300-559 Bad credit.

So what is taken into account with your credit score?  According to the FICO site:

  • Payment History (35%): How good are you at making your payments, and making them on time?
  • Amounts Owed (30%): How much credit are you using – how much do you owe?
  • Length of Credit History (15%): How long have your accounts been open, and how long since you’ve last used them?
  • New Credit (10%): Are you opening a lot of credit cards lately, or other lines of credit? Lots of inquiries for credit?
  • Types of Credit Used (10%): Number of and different types of accounts.
So it’s important to stay on top of these things, especially when you’re looking to get a large new loan like a home mortgage. Check out this post for a more in depth look at what a good credit score is.

Where Can You Check Your Credit Report?

There are a couple of things to stay on top of when carefully monitoring your credit, your credit score and your credit report.  Your credit report will be a detailed listing of your credit situation showing all of your accounts, loans,  negative events on your record, missed payments, etc.  In other words it will give you an overall look at your credit situation.

You should never really have to pay for your credit report as you can get a free report from each of the big three credit agencies every year through the government site at AnnualCreditReport.com.  Personally I like to stagger pulling my reports for each agency, and get one every 4 months to better monitor my situation.  If you haven’t pulled one in a while, however, and you’re hoping to get a loan soon, you may want to pull all three.

Where Can You Check Your Credit Score For Free?

There are several places that you can check your credit scores from the three agencies, TransUnion, Experian and Equifax, for free.    Keep in mind these credit scores are not the FICO score used by the banks when deciding on your rate, but they are similar and can help to inform you and give you a good idea of where  your FICO credit score will probably be.

You can currently get your credit scores from the big 3 agencies for free if you know where to go.  Here is how I get mine.

Your credit score for the three agencies can help to inform you of approximately where your credit score will be when the mortgage companies check it.  But where can you go to get your actual FICO score?

Where Can You Get Your MyFICO Score?

Your FICO score, the one used by the mortgage companies in order to give you your home loan rate, is a bit harder to come by without paying for it.  Right now you can get it via a free trial from MyFICO directly. Other places I’d recommend going to get it:

Conclusion

Changing your credit score isn’t an easy process and won’t happen overnight. So if you’re hoping to make a big purchase anytime soon, like a home, make sure to get your credit scores early, and do what you can to improve them by the time you finally apply to get a loan.  Have a decent amount of accounts, utilize the credit responsibly, don’t cancel old accounts and make sure that all of your payments are on time.

Have you recently purchased a home and seen what kind of an impact a credit score can have? Hoping to buy sometime in the near future?  Tell us your thoughts on credit scores and buying a home in the comments.

Source: biblemoneymatters.com