You're taking control of your finances and getting a copy of your credit report. But just what does your Experian credit rating mean? Why is it different from other credit reports? Let ApartmentStores Moving and Relocation help you navigate the maze of credit ratings and scoring systems so you can make informed and educated decisions about your financial portfolio.

Experian credit ratings are based on a uniquely developed system called PLUS ScoreSM. It is a numerical representation of your credit worthiness used by potential lenders, landlords, even employers to determine what type of risk you'll be should they approve your application.

Experian currently offers two of the above scores to consumers, the PLUS ScoreSM and the Vantage Score. The PLUS ScoreSM was developed by and is used exclusively in credit ratings by Experian. The Vantage ScoreSM is a generic credit score developed cooperatively the national credit reporting companies.

What is in a PLUS scoreSM?

The main factors used in the Experian credit rating system that determine your PLUS ScoreSM include:

  • Number of inquiries - How many times you have applied for credit or a potential lender has requested your credit report.
  • Number of accounts - How many credit cards or credit accounts (such as mortgages, car loans, etc.) you have
  • Payment history - Whether you paid your accounts on time and, if not, how late were you in making payment and how often you were late.
  • Combined balanced owed - How much money you owe in total and the credit limit on open accounts.

This data is combined to generate the Experian credit rating or PLUS ScoreSM. Ratings range from 330 to 830. A high PLUS ScoreSM indicates that you are a lower credit risk to those lending you money. Many times a high PLUS score is rewarded with lower interest rates and no down payment requirements. On the other hand, a low PLUS ScoreSM could negatively impact your chances of ever owning your dream home or obtaining low interest rates on loans.

The Experian-credit rating is easy to understand and use than many other credit scores. It's typically the most up-to-date model, reflecting recent changes in your spending habits.

What is a VantageScore?

There are six factors that affect your VantageScoreSM with Experian,

  • Payment History - Do you pay your bills on time? How often are they late? How late?
  • Utilization - The percentage of credit you have used or owe
  • Balances - Amount owed both current and delinquent amounts
  • Depth of Credit - The length of time you've used credit and the types you've used
  • Recent Credit - The number of recent inquiries into your credit or new cards/loans acquired.
  • Available Credit - The amount of credit you have available on all loans/cards

The data is measured and weighted (given a level of importance) and a score is given. The major difference between Experian's VantageScore and Experian's PLUS ScoreSM is in the consumer's ease of understanding of what each score means. Remember, Experian's PLUS ScoreSM grades you using a system of numbers. The VantageScoreSM offers a letter “grade” for a credit rating making it easier for you to understand your rank: the better the grade, the better the chances are for getting the new car you've been eyeing!

VantageScore's scale is as follows:

901 - 990 = A - very low credit risk
801 - 900 = B - a good credit risk
701 - 800 = C - credit worthy
601 - 700 = D - risky
501 - 600 = F - very high credit risk

So, what does all of this mean?

Credit scores are important because not only do they set a way for prospective lenders, landlords or employers to systematically rate responsibility and the likelihood that they will receive a return on their investment, but credit ratings can also mean the difference between an 8% or an 18% loan - your hard earned money in your pocket, or theirs!

As with anything else in life, you work hard and you reap the rewards. Similarly, if you are diligent at managing your finances, paying your bills on time and keeping within budget, you will be given brownie points for a job well done. If you have a less than satisfactory credit score, it is a way to warn you that others may not have as much faith in your ability to pay.

There is always a way to improve your credit ratings. Know what your credit scores are, what they mean, and immediately inquire about any discrepancies listed on your credit report. Get your yearly free credit report to start the process. From there, you can begin to understand where your strengths and opportunities to improve lie; then take control of their financial destiny.

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