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VantageScore - The New Credit Scoring System

A new credit scoring system called "VantageScore" has been designed to make it easier for financial institutions to assess loan applications and also give consumers an easier way of measuring their credit worthiness. The three nationwide consumer credit reporting agencies; Equifax, Experian, and TransUnion created this new system.

The three credit agencies each have been using their own formulas to generate their own credit scores, so lenders would have to reconcile three different scores when dealing with a consumer's application for credit. This was a long and tedious process because the scores between agencies varied.

Now, using this new system, only one formula is used to create the scores for all three credit bureaus, so the scores will be virtually the same. This will provide a highly consistent score for lenders to interpret and one that is easy to understand for consumers.

The scores will range from 501 to 990. The high end is slightly higher than scores currently in use. The scores will be grouped in a way similar to academic grades. For example:

A -- 901-990

B -- 801-900

C -- 701-800

D -- 601-700

F -- 501-600

The new score is expected to reduce the fluctuation in a consumer's scores by an estimate of 30 percent compared with the old method.

VantageScore is owned by all three agencies jointly and is being sold by each independently through licensing agreements with VantageScore Solutions LLC.