Here’s a bit of interesting news. The big three credit reporting agencies (Equifax, Experian and TransUnion) have come up with a new scoring model that is uniform between the three companies. Up until now, each company had their own unique model for scoring an individual meaning that the scores were sometimes quite different. The new scoring system should be more consistent and objective than the three separate models each had before.
The new scoring system is called the “VantageScore” scoring system. If there are differences in the credit score for an individual, it is because the different reporting agencies may have differing data on the individual, but the way the data and interpreted is scored is consistent.
“VantageScore” has a range from 501 to 990 with scores of “A” (901 to 990) “B” (801 to 900) “C” (701 to 800) “D” (601 to 700) and “F” (501 to 600). For more information visit the Web sites of the three major credit bureaus. The score is currently only available to businesses, but will be available to individuals later this year.
It seems to me that this new scoring system will, over time, likely replace the individual scoring systems each of the credit reporting agencies currently has. From a business perspective, it makes more sense comparing the scores on a consistent criteria rather than various ones when the exact criteria aren’t known in the first place.
It should also give consumers some good hints on exactly how the credit scores are scored. If you look at your three reports and two are the same and once has an extra piece of data, you will be able to determine exactly how much that extra piece of data is worth due to the difference in score. Up until now, any difference could have simply been from a different scoring methodology. My prediction is that in time this new service will enable everyone to know more accurately how different pieces of your credit report affect their credit score.