Money Experiences

Thursday, March 16, 2006

New Credit Score System

According to this article on Marketwatch, the three biggest credit bureaus – Equifax, Experian, and TransUnion - will roll out a system in the coming months that will calculate consumer credit scores more consistently across the firms than the current systems.

These bureaus currently mainly use the FICO system, but expect the new one, called VantageScore, to quickly gain popularity. What does this do for us? Well, I see a couple good things coming out of this:

More consistent results. When I was looking for homes, I got my credit scores to make sure that there wouldn’t be any surprises waiting for me when I applied for a loan. Though the data presented in all three were the same, I got different scores from each: not radically different, but enough so that I almost fell out of the tip-top range for one.

Easier corrections. Due to the more consistent results, I think that it will be much easier to pinpoint errors made on individual reports and have them corrected.

Something that I’m curious about, though, is the type of score that the bureaus will continue to give out for free about part of their requirements. Will it be the older FICO, or the newer VantageScore? This could make a big difference in the usefulness of this service, especially if one uses VantageScore and the other two continue using FICO!

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