Credit Reporting Bureaus Adopt New Scoring System
In an effort to simplify loan application criteria for all forms of consumer credit, including mortgages, the three major credit bureaus are disposing of their proprietary formulas, and have bonded to roll out a new credit scoring system this year.
Equifax, Experian, and TransUnion announced the launch of VantageScore, a more user-friendly, A through F scoring system designed to be more consistently evaluated by lenders.
VantageScore ratings will range from 501 to 990 with A and B being the best potential borrowers and D and F being the weakest.
- A — 901-990
B — 801-900
C — 701-800
D — 601-700
F — 501-600
The reporting bureaus expect to start using the scores soon, although your VantageScore won’t be available to you later in the year.
Although the new scores will be consistently calculated between the three companies, differences in scores may still occur due to the amount of reporting information each company gathers.
And, this doesn’t mean that credit reporting errors will magically disappear. Critics are quick to point out that underlying errors in credit reports are more troublesome to consumers than interpreting competing credit scores.
It will be interesting to see how this affects mortgage lenders, many of which use their own creditworthiness scoring system, called FICO.
VantageScore has created an an informational Web site at www.vantagescore.com.
Additional reporting at MSNBC.
Technorati Tags: credit, reporting, scores, FICO, bureaus, mortgages, VantageScore
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Add comment March 15th, 2006
