Only people with zero credit have credit scores of zero, right? This is a common statement, which also happens to be incorrect.
“…credit scores of zero…”
Who’s that self-proclaimed financial guru who likes to tell everyone that his FICO score is, “zero?” I don’t remember his name, but here’s why he’s wrong. First, there is no such thing in FICO or VantageScore’s credit scoring models as a numeric credit score of zero. FICO’s credit scoring models range from 300 – 850. VantageScore adopted the same scoring range (300-850) beginning with the third version of its scoring model, VantageScore 3.0. It is impossible with either model to be awarded any score lower than 300. As such, anyone walking around saying they have a credit score of zero isn’t being honest with you.
“Only people with zero credit…”
Your credit report is not guaranteed to have a score because it must meet certain minimum requirements. And, there is more than one reason why your credit file might not be eligible to be scored. To understand these reasons you first need to take a look at the minimum scoring criteria itself, as required by both FICO and VantageScore’s credit scoring models.
Minimum Requirements for a FICO Credit Score
FICO’s scoring models require a credit report to meet all 3 of the following conditions in order to be scorable under their models:
- The credit report must have at least 1 undisputed account which has been opened for at least 6 months AND
- The credit report must have at least 1 undisputed account which has been reported to the credit bureau within the past 6 months AND
- The credit report must not have a deceased indicator (or, in other words, nowhere on the credit report can it state that you are deceased).
A single account can satisfy the first two criteria above or the criteria can be satisfied by more than one account. Neither a collection nor a public record can satisfy the above criteria.
Minimum Requirements for VantageScore
VantageScore features a different minimum scoring requirements when compared with FICO. The company states that “By using a broader and deeper set of credit file data and more advanced modeling techniques, the VantageScore model can provide credit scores for 30-35 million consumers who are invisible to conventional credit scoring models.” The company also states that “VantageScore 4.0 scores some 30-35 million consumers who cannot obtain a credit score when conventional scoring models are used.”
VantageScore’s minimum scoring criteria (version 3.0) include:
- At least one qualified trade on file AND
- Consumer cannot be reported as deceased
The score exclusions for VantageScore include:
- Consumer has a deceased status AND/OR
- No credit file information, except an inquiry
Do You Really Need Credit Scores?
There will always be a certain segment of the population who is anti-credit. Yet the simple truth is that life without credit scores can be a lot more difficult than it needs to be. Putting in the effort to earn good credit scores can grant you access to some terrific benefits, including cheap money.
First, with good credit scores you will have an easier time qualifying for loans and credit cards, but the benefits of good credit scores certainly do not end here. Good credit scores can potentially lead to lower insurance premiums, better interest rates (and, by extension, lower payments), low or no deposits on new utility accounts, and many more benefits than you have probably ever considered. The bottom line is that good credit scores can save you money, something which everyone can agree is always a smart idea.
By John Ulzheimer
Better Day Consultanting, The fastest growing credit repair firm in the U.S. Call now: 833-522-0200 www.betterdayconsulting.com