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4 mins read

Do You Know The Two Types of Credit Scoring Models?

If you’re just beginning to track your credit score regularly, you can be confused about where to start. Which credit score should you check? Your FICO Score or VantageScore? Is tracking one of them sufficient, or should you monitor both? How are these models of credit scoring different?

This article explains and breaks down the differences between these credit scoring models. Keep reading to know more!

What Is a Credit Score?

A credit score is a three-digit number that represents a borrower’s creditworthiness. It’s determined based on your credit history, including your open accounts, the total amount of outstanding debt, credit repayment history, and other such factors.

Credit scoring models use a 300-850 point credit scoring scale, with each credit score falling within a specific range. Your scores influence a lender’s decision to offer you credit. They help lenders understand how you’ve used credit in the past and how you’re likely to use credit in the future. The higher your score, the better you look to potential lenders.

What Are the Main Credit Scoring Models?

Although there are different types of credit scores, most of them fall under two main credit scoring models: FICO and VantageScore. Both your FICO Score and your VantageScore measure your financial stability and how likely you are to repay your debt. However, there are a few minor differences between them. Keep reading to know more!

FICO Model

The Fair Isaac Corporation first developed the FICO credit score in 1989. Over 90% of top lenders use FICO scores to make lending decisions. FICO regularly updates its credit scoring models to accommodate changes in the industry and provides a more nuanced perspective of a borrower’s creditworthiness

FICO uses the following ranges to determine your credit rating:

  • Exceptional: 800-850
  • Very Good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 300-579

According to FICO, a score between 670 and 739 is considered good, and it can help you secure lower interest rates from your lenders.

Five factors determine your FICO score, and each of these factors carries a different weightage. They are as follows:

  • Payment history, which measures your on-time payments. (35%)
  • Amounts owed are the debt you’re carrying relative to your credit limits. (30%)
  • Length of credit history measures how long you’ve been handling credit. (15%)
  • New credit measures how often you apply for new credit. (10%)
  • Credit mix measures how you handle different types of credit, such as credit cards and loans. (10%)

VantageScore Model

In 2006, three major credit bureaus, Equifax, Experian, and TransUnion, in collaboration, created the VantageScore credit score model. The VantageScore model uses many of the same factors as the FICO credit score model to determine your credit score. However, it weighs these factors differently.

In the FICO model, your payment history is the most significant factor affecting your credit score. However, in the VantageScore Model, your credit utilization ratio is the most influential factor in credit scoring.

The VantageScore credit score ranges are as follows:

  • Excellent: 781-850
  • Good: 661-780
  • Fair: 601-660
  • Poor: 500-600
  • Very Poor: 300-499

The VantageScore model uses the following factors to calculate your credit score:

  • Total credit usage, balance, and available credit (Extremely Influential)
  • Credit mix and experience (Highly Influential)
  • Payment history (Moderately Influential)
  • Age of credit history (Less Influential)
  • New accounts (Less Influential)

If you have further questions about calculating your score and which model to follow, get in touch with a credit bureau.

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1 min read

How Abbey Wemimo Built a Billion Dollar Business in 4 years

Abbey Wemimo is the Co-Founder and Co-CEO of Esusu, the leading financial technology company helping individuals save money and build credit.

After receiving a $130 million investment in 2021, Esusu is now valued at $1 billion, making the four-year-old company one of only a few Black-owned unicorns in the world.

In this episode Abbey shares:

  • How his background and journey to America inspired the creation of Esusu.
  • How it feels to have built a billion-dollar business.
  • The factors that contributed to Esusu being so attractive to investors.
  • The initial struggle he and his co-founder Samir Goel experienced trying to raise money.
  • How Esusu benefits renters and property owners.
  • Growing pains and how they are being addressed.
  • Where he sees Esusu in 5 years.
  • Advice for founders who aspire to build sustainable multimillion and billion-dollar businesses.

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4 mins read

7 Tips for Paying Off Your Credit Card Debt Faster

Credit card debt is something that looms over everyone’s head. And that’s okay! Having a credit card can offer many things to people: financial security, an emergency fund, extra spending cash, and so on.

However, interest charges are something that usually gets to the best of us in the end. But worry not!

Here are our top tips to pay off your credit card debt:

Too soon?

Dealing With Minimum Payments

Minimum payments will, most likely, not be enough to cut down your debt. Oftentimes, minimum payments don’t even cover your interest for the month. It’s always a good idea to pay more than the minimum on your monthly payments. Keep in mind it doesn’t have to be very much; a few dollars here and there can make a big difference!

Automatic Payments: Out of Sight, Out of Mind

Have you ever missed a payment for your credit card? I’m sure we all have— but that’s okay. Setting up an automatic payment helps you keep on track (even if it is just the minimum). From there, you can always add on more money if you so wish.

Interest Rates Can Be Negotiated

If you are finding that you’re barely covering your interest charges, it might be a good idea to strike up a conversation with your credit card company about getting a lower interest rate. This rate can make or break your bank account and your debt! Even if you think they won’t negotiate, it’s still a good idea to try.

Balance Transfer Your Credit Card

While this seems counterproductive, promotional offers of balance transfers can help you achieve your goal of smaller debt. Many credit card companies offer 0% interest on balance transfers for 18 months or longer. These transfers can help because it gives you more time to pay back the balance, with no additional fees attached.

Snowball vs Avalanche

No, we aren’t talking about going to a winter wonderland. There are two methods that many people recommend for decreasing your debt: the Snowball Method and the Avalanche Method. In the Snowball Method, you focus on paying down the smallest balance as aggressively as humanly possible.

During this time, you only pay the minimum on other debts. This method helps people feel more motivated. After you pay off that balance, you move on to the next.

The Avalanche Method focuses on paying down the debt that has the highest interest rate. So if you have two credit cards, one at 21.99% and the other at 19.99%, you would focus on paying down the 21.99% card.

While this does take longer to pay off debt, it saves you more money over the long run.

Personal Loans

You can always go to your bank to consolidate your loans. What this means is that all of your debt (or as much as possible) will move into one lump sum payment a month, as opposed to multiple payments.

Debt Settlement

Usually, debt settlement is a last choice resort. Most debt settlement requires that you have over $10,000 in credit card debt. Debt settlement is a negotiation between you and your credit card issuer to determine a payoff amount for less than you owe. Your account will be closed so you can no longer use your credit card.

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4 mins read

5 Ways to Build Business Credit

Building business credit can help your company in a variety of ways. It can make obtaining specific types of financing, business insurance, or payment terms with suppliers easier or less expensive. It may even assist your company in acquiring lucrative business contracts.

Business Credit

In this article, we’ll go over how to build business credit in order to help your company grow.

1. Open a Business Bank Account

You should open a business bank account as soon as possible in order to establish business credit. A business bank account allows you to keep your personal and business finances separate. You’ll also be able to apply for business loans, merchant cash advances, and alternative lending products.

Your business credit score will increase if you use your business account to pay for business expenses such as utilities, commercial rent, and employee payroll. Strong business credit history will affect your business credit score positively if you use a dedicated bank account for your business finances and make on-time payments.

2. Get a Business Credit Card

Another way to keep your business and personal finances separate is to apply for a business credit card that is only for business-related purchases. This allows you to build your business credit score without dipping into your personal credit balance and negatively impacting your personal credit score. Purchase items for your business location, such as marketing materials or furniture, with a business credit card.

3. Set up Trade Lines with Suppliers

Establish trade lines (i.e. lines of credit) with your suppliers. Even if you start with low credit limits, developing these lines will allow you to build your business credit while also providing documented proof of your payment history.

Create trade lines with suppliers with whom you frequently rent equipment or purchase inventory. These trade lines require regular payments, which will improve your business credit score if you make payments on time. When you are successful with a few initial suppliers, you’ll have positive credit references to build upon with future suppliers.

4. Pay on Time or Early

Creating trade lines is only useful if you can pay on time. Make sure you have the procedures in place to pay your lenders and suppliers on time. Payments that are even just a few days late can damage your business credit report and lower your credit score. If you’re worried about meeting payment deadlines, identify any cash flow gaps that could affect your business.

5. Keep Track of Your Business Credit Score

Monitoring your business credit score is the best way to understand your business credit. You can do this by reviewing your TransUnion or Equifax business credit report. When you review your business credit report, you will be able to identify specific issues causing your score to fall, such as missed payments, outstanding balances, credit utilization, and current lawsuits on your profile. Knowing the exact details of your business credit report gives you specific items you can work on to improve your score.

Now that you know how important business credit is, you can take the necessary steps to improve it.

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5 mins read

5 Money Myths That Could Be Preventing You From Building Wealth

They say money can’t buy you happiness—and to a certain extent, that’s true. But poverty doesn’t bring happiness either, does it?

Let’s face it, there are a ton of money myths out there parading around as truth. But the real truth is that most of these myths are keeping hardworking people broke!

The Internet can be filled with financial “tips” that are more myth than fact. You must validate financial tips you find on YouTube, TikTok, Instagram, Reddit, or Facebook by doing your own research and speaking to a professional.

But don’t worry, to get you started, we’ve compiled a list below to call out “truths” as myths.

1) I can start saving later.

Savings is only for the rich, right? Well, not if you want to stop living paycheck to paycheck. Nearly one-quarter of Americans fail to save money every month.

However, the key to saving is to save the right thing. The rate of inflation reduces the purchasing power of your money but also increases the value of your assets, such as real estate or stocks. Rather than saving for the sake of saving, invest your hard-earned cash in assets that will pay you and keep pace with inflation.

2) All debt is bad debt.

This is one of the biggest myths of all. Having an outstanding balance on your credit card or a high-interest loan can cost significantly more than the sum you originally borrowed. However, not all debt is the same.

It is possible to acquire “good debt”—debt with a low-interest rate that builds wealth over time. Good debt will provide future value, like a mortgage or student loans.

But you must avoid overextending yourself, even with good debt: It can become a problem if you cannot afford the payments. The amount of debt you have will play a significant role in determining your credit score, which is used by lenders to assess your credit risk. The higher the score, the better the terms, which saves you money on interest.

3) You’re throwing away money by renting.

A house can be a good investment as equity will be built over time. However, becoming a homeowner is not always financially feasible because it requires you to pay the mortgage, property taxes, homeowners insurance, maintenance, and repairs—not to mention the upfront costs of buying a home.

If you are only planning on living in an area for a few years, renting could make more sense financially. It can also be a great way to save a lot of cash if you live below your means.

4) Credit cards should be avoided.

Credit cards are convenient, but they can easily become a burden if you’re not careful. However, that doesn’t mean you shouldn’t have one.

As long as you pay off your card balance in full each month to avoid interest, making purchases with credit can be worthwhile. In addition to being a great way to redeem points for cash, travel, electronics, or investing, it can also help increase your credit score, making it easier to buy a car or house in the future, with a lower interest rate.

5) You’ll spend less money during retirement.

Many people make the mistake of assuming they have plenty of time to save for retirement. In reality, it approaches faster than you think. And for some, their retirement lifestyle could be even more expensive than their working years.

Retirement looks different for everyone. For some, it may be a time for leisure and traveling. For others, it offers the chance to pursue a second career they’ve always dreamed of. Maybe you just want to leave a legacy for future generations of your family. No matter what it is, you can do it!


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2 mins read

Black Owned Credit Building Platform, Esusu Raises $130 Million, now valued at $1 Billion

In the U.S., credit is your lifeline to the financial system. To date, 45 million Americans lack credit scores, and millions more are marginalized due to their background, race, and zip code.

Esusu is a rent reporting platform that captures rental payment data and reports it to credit bureaus to boost users’ credit scores.

Founded in 2018 by Abbey Wemimo and Samir Goel, Esusu was built to include everyone on the journey from financial identity and stability toward financial wellness that leads to wealth building.

Over the past year, Esusu has experienced monumental growth spurred by industry adoption, new rent reporting regulations, and partnerships with the country’s largest property owners and operators.

Esusu works with over 30% of the largest asset managers and property managers in the nation and helps report rent payments for more than two million rental units across all 50 states in the U.S., up from 1 million units last year.

Today, the 4-year-old company announced that it has raised $130 million in a Series B fundraising round. This investment gives Esusu a valuation of $1 billion, making it one of the very few Black-owned unicorns in the U.S. and globally.

“We started Esusu with the belief that where you come from, the color of your skin, and your financial identity should not determine where you end up in life,” said Wemimo in a statement.

The round was led by Softbank with participation from Jones Feliciano Family Office, Lauder Zinterhofer Family Office, Schusterman Foundation, SoftBank Opportunity Fund, Related Companies, and Wilshire Lane Capital.

Esusu plans to use the funding to triple its employees, “turbocharge growth through product innovation, and build the most comprehensive financial health platform in the market.”

Tony O. Lawson

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3 mins read

Kiddie Kredit, The App Promoting Financial Responsibility, One Kid at a Time

Kiddie Kredit is a mobile app designed to educate children on the credit system by completing chores.

The free app gives kids points for completing chores around the house. After meeting a goal, they are rewarded with both monetary and non-monetary prizes from their parents.

We caught up with founder and CEO, Evan Leaphart, to learn more about the company.

kiddie kredit
Evan Leaphart, founder and CEO of Kiddie Kredit

What inspired you to start Kiddie Kredit?

I was inspired to start Kiddie Kredit because I realized that the moment I turned 18, I hopped on the opportunity to get a credit card, over-leveraged my situation, and fell into early debt because of poor financial decisions.

I saw how much this decision negatively affected my credit and hindered my ability to gain access to capital over the next few years. I had a moment of clarity where I realized that although my score was low due to bad choices, I was unaware of how credit worked in the first place. I wanted to create something at scale that could change this for the generation after me.

What are some ways that financial literacy at a young age can benefit a child in adulthood?

If a child learns to spend within their means and save, they will be creating solid foundational habits that will make managing a credit card easier as they enter adulthood.

They will be less likely to have high utilization on their credit cards which will, in turn, lead to better credit scores which will ultimately lead to lower interest rates on a mortgage and/or auto loan.

Where do you see Kiddie Kredit 5 years from now?

I see us providing as many children as possible with a responsible path to their first credit card. We also have a couple of (confidential) things in the works that we are excited about.

What advice do you have for aspiring entrepreneurs?

Keep going! It is literally that simple. When people see how long you have been pursuing your passion despite all of the naysayers along the way, it won’t matter as much about where your product/service is at.

They will begin to believe more in YOU and your ability to execute. If an investor knows that you won’t let this dream die they are more inclined to believe you won’t let their investment die either. So I simply say…. KEEP GOING!!!

Tony O. Lawson

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