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Are_You_Ready_For_A_New_Credit_Scoring_System_

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					Title:
Are You Ready For A New Credit Scoring System?

Word Count:
488

Summary:
Provides information and tips on the new credit scoring system which will
be used by creditors and the three major credit bureaus in addition to
the FICO score currently used.


Keywords:
credit score,credit scoring,vantagescore,fico score,credit,credit
report,personal finances


Article Body:
Janet just ordered her free annual credit report and was excited about
what she saw on her report. She decided to order her FICO score, and low
and behold, her score increased over eighty points from the last credit
report she ordered over a year ago. She had worked hard to pay off her
credit cards throughout the year and was pleased at the positive results
on her credit report. Janet was so excited that she finally figured out
how to improve her credit report and FICO score. Unfortunately, as soon
as she found out about her great credit report and FICO score, she ran
across some information about a new credit scoring system that was going
to be effective soon! She said to herself, I can’’t believe it! I worked
so hard on improving my score and now they come up with this!

Just when you thought you knew how to understand and obtain your FICO
score, the whole credit scoring system is about to change! The three
credit bureaus have decided to flip the script on us and have worked
together to create a new credit scoring system. It’’s called the
VantageScore.

Why have the three credit reporting bureaus; Experian, Equifax and
TransUnion decided to create a new credit scoring system? They claim the
new scoring system will reduce discrepancies between your scores and the
three bureaus. These bureaus indicate that the VantageScore, returns more
accurate scores on consumers which may have a credit history which is
limited.

Are the credit score ranges the same for VantageScore and my FICO score?
No. The VantageScore will have a range from 501-990. For instance, a
score of 901-990 is an A; 801-900 is a B; and 501-600 is considered an F.

The FICO credit scoring system has a range from 300-850. It appears that
the VantageScore system may be tougher than the current FICO score. For
example, if you have a FICO score of 720 you could get a 9% interest rate
on a credit card you may have applied for. With the VantageScore, your
interest rate for this same credit card may be as high as 20%!
The VantageScore became effective for commercial use on March 14, 2006.
Time will tell, how effective this system will be for creditors and
consumers. It appears that the new scoring system may be more
advantageous to the creditors rather than the consumer, since the
VantageScore ranges are much higher to qualify for a good interest rate.
This would appear to allow creditors the ability to charge consumers more
for products and services purchased.

As a consumer, make sure you become informed about the new VantageScore
system and how it will affect you! Although the FICO scoring system can
be still used by your creditor, they have an opportunity to choose which
system they will review for your credit. Now there are two systems
currently. How long the FICO scoring system will be around is anyone’’s
best guess!

				
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posted:2/17/2010
language:English
pages:2
Description: My Articles about Credit cards and about their security.