Credit Score Confusion
You can't get a loan today without a credit score -- a three-digit number that's based on your payment history, outstanding debt and the number and type of accounts.
Most lenders use the FICO credit score, developed by Fair Isaac Corp. 17 years ago. But now, the nation's three largest credit bureaus have developed a competing system, which they say will make it easier for lenders to determine a consumer's credit risk. It also will reduce the large score variations that are common among the three bureaus: Equifax Inc., Experian and TransUnion.
The three credit bureaus insist the new scoring system, called VantageScore, will simplify the credit-granting process. However, they have released so few details about it that industry officials and consumer activists said that the credit-application process could become more confusing for consumers, certainly in the short-term and possibly longer.
One reason: VantageScore will use a different numbering system than FICO. For FICO, scores range between 300 and 850; most people score in the 600s and 700s and anything above 700 is considered very good financial health.
VantageScore's numbers range from 501 to 990, with anything above 900 considered an "A;" between 800 and 900 a "B" and so on. A 700 would receive a "C" rating under VantageScore but would be considered top-notch under FICO.
Additionally, although the three credit bureaus are starting to sell VantageScore to lenders, the new scores won't be available to consumers for several months.
For more details read my story in today's paper.
And for more discussion, either post a comment or e-mail me at firstname.lastname@example.org. Tell me your credit-score tales. You can post questions as well, but given the paucity of information about VantageScore, I can't promise any answers, at least not right now. Maybe in a few weeks.
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