Credit Card News: Your Money

Credit bureau TransUnion has come up with a new way to assess a consumer’s creditworthiness. The company is touting their new credit scoring product as a more reliable and accurate measure of people’s likelihood to pay their debts on time, and saying it will allow prospective lenders to see scores for 95% of adults in the United States.

CreditVision Link, TransUnion’s new credit scoring product, makes it easier for consumers to be approved for loans, says the company. Product testing showed a 24% jump in auto loan approval when using CreditVision Link versus other credit scoring models. This is beneficial for both consumers who want to get loans, and lenders who want to increase their lending portfolios.

Up to 60 million more people can be scored with CreditVision Link

TransUnion said that more than 60 million consumers who did not have credit scores—would be able to be scored using CreditVision Link.

People who don’t use credit cards can sometimes have poor credit scores, not because they are not responsible borrowers, but because they simply haven’t used credit often enough.

CreditVision Link uses more than three billion nontraditional data records, including property records, tax and deed records, checking accounts, and payday lending information to provide credit scores for folks who have thin credit files that make it difficult for them to be scored by traditional methods.

Information on consumers includes up to 30 months of payment history, amounts borrowed, and minimums due.

Credit scoring includes several factors

Traditional credit scores are based on five factors: payment history, amounts owed compared with available credit, length of credit history, types of loans utilized, and new lines of credit. Of these, payment history—whether payments are made on time and with consistency—and debt-to-credit ratio are the two weightiest factors.

To achieve a good or excellent credit score, consumers should maintain their accounts and keep them open, to establish the longest possible credit history. They should also keep debt loads to less than 30% of their total available credit, make all payments on time, refrain from applying for too much new credit, and have several types of loans; for example, a credit card, a mortgage, and an auto loan.

A good credit score leads to approval for loans, better interest rates, and more offers for high-value rewards credit cards. These cards offer perks like cash back, frequent flyer miles, concierge service, and hotel points.