Understanding the new credit rating system
On March 14, 2006 the three leading credit agencies, Equifax, Experian, and TransUnion announced that for the first time, they would all adapt the same credit scoring system. The new system, called the VantageScore, is based on the time honored academic grading system of AF.
What will a creditor see now when they check your credit repot? Much the same things they saw before. While the grading system seems to be more simplified, there is still a large range between each rank. Moving from BA is not as simple as it may seem. Take a look at the point values assigned to each grade:
A – 901-990
B – 801-900
C – 701-800
D – 601-700
F – 501-600
The intent in changing to the new system was to help creditors accurately gage consumer's credit scores. Prior to the new system, each of the three credit agencies may have had different numerical scores, which made determining the actual score more difficult. Under the new system, a divergence in a few points should not effect the scoring as much as it did prior to the conversion.
The new scoring system was made available to lenders on March 14, 2006, but will not be available to consumers until the end of the year.