The key to unlocking credit is made of plastic

Understanding some fundamental principles about credit cards will help your customers choose the best ones to carry in their purses or wallets.

There are three key issues to consider. First, is the account reported to Experian and the other national credit reporting companies? Second, is the account secured or unsecured? Third, what is the individual’s association with the account?

There are a number of different types of accounts for which a card may be issued. However, the account associated with the card must be reported to Experian in order for it to appear in a credit history and be included in credit score calculations.

Debit cards, prepaid cards and “check” cards are not reported to Experian, so they do not help credit scores.

Secured accounts typically are associated with a savings account, but they may be reported by the lender. If reported, an unsecured account typically will have a less positive impact on credit scores than an secured account, but it is still an effective tool for building credit over time.

Unsecured accounts — traditional credit or charge cards — have the largest effect. They represent the greatest lending risk, so good performance will have the highest impact on credit scores in the shortest time — assuming all other aspects of the person’s credit history are strong.

A final consideration is the person’s association with the account. An authorized user has no responsibility for the debt. While an authorized user account can help credit scores, it will be less meaningful than an account for which the person has full responsibility for debt repayment.

Being a primary or joint account holder on an unsecured credit card account with a positive payment history is a key element to unlocking a person’s credit potential.

To learn more or to get answers about general credit questions visit us on Experian.com credit education page.

VantageScore^® helps consistently measure a consumer’s creditworthiness across all bureau platforms

The majority of lending decisions are based on custom scores developed and owned by individual creditors. Financial institutions view these custom scores as intellectual property, and they are rarely, if ever, disclosed to consumers. There also are various third-party scores that lenders use in the underwriting process that are implemented differently to assess a consumer’s creditworthiness.

VantageScore^® was developed by the three national credit reporting companies (CRCs) to resolve the challenge of having the same information deliver a different assessment of a consumer’s creditworthiness. Because it is the same model at each CRC, VantageScore delivers a consistent measure of the consumer’s creditworthiness across all bureau platforms. Any differences in a consumer’s credit score can be attributed to the differences in the data, not in how the score was implemented at the CRC.

To learn more about VantageScore, click here, contact your local Experian sales representative or call us at 1 888 422 0105.

VantageScore^® is owned by VantageScore Solutions, LLC.