Experian, Equifax and TransUnion New Scoring Model
by Steve Cypher on Monday, January 7th, 2008Here at Auto Credit Express, our mission is to put customers with bad credit into affordable reliable vehicles so that they can repair their credit and move back into conventional financing as soon as possible. We also stress the fact that knowing your credit score and what is on your credit report is very important before you try buying a new car. Now, the three major credit bureaus have thrown a new wrinkle into the “credit score” part of that statement.
What is VantageScore?
VantageScore is the new scoring model developed by the three major credit bureaus. It uses a numerical rating of 501 to 990 (unlike the FICO score of 300 to 850) and then assigns a letter grade to the score:
- 901-990 equals “A” credit
- 801-900 equals “B” credit
- 701-800 equals “C” credit
- 601-700 equals “D” credit
- 501-600 equals “F” credit
Why did they do this?
Basically, they did it to make more money. You see, when a business runs a credit bureau, the credit bureau pulls up the credit history, then runs it through the FICO system and sends the report, along with the credit score, to the business. Since they used the FICO model, they also pay Fair Isaac (the company that created the FICO score) for using the system. By creating their own scoring system, they eliminate the middle man and avoid paying the fees to Fair Isaac.
Since Fair Isaac owns the system, as well as the scoring model, VantageScore could not duplicate the scoring system, so that had to be changed.
What does this mean to me?
At this point in time, it is hard to say. As it is, consumers have a difficult time trying to manage their credit history on three separate bureaus. If there is bogus information listed on all three bureaus and you try and have it removed, two of the bureaus may remove it while the third refuses to do so. Throwing in a second scoring system could complicate things even further. If it works to the advantage of the consumer – especially those with new or limited credit histories – so much the better. But, as we have seen from past examples, this is not always the case and if the new system further limits worthy customers from having banks extend them credit, the consumer loses again.
Hi,
In looking for the least expensive but best value in 3 beauru monitoring I discovered Trans Union’s new system ..apparently shared by all. I want to know ..is it reliable or worth using for the consumer? Should we disregard this new scoring system for now, better stated, should we use only the FICO?
I’m paying off and disputing junk on my Experian report but haven’t seen the other two. I have a creditor who keeps putting the same false crap on my credit history with Experian….I keep disputing it and Experian removes it. I really need to have it off all three agency reports. I call this creditor and they keep saying they’ll fix it.
Anyway, on subject, should this new model of scoring be just as reliable to use?
The new scoring model is weighted a bit differently than FICO and it was created by the credit bureaus to circumvent the fees they were paying to Fair Isaac. The jury is still out as to whether it will be adopted by the banks and other institutions that are currently using FICO. I would say that FICO is still the 500 pound gorilla when it comes to credit scoring and, as such, is still the score that matters. The new scoring system means that, if it is accepted, now we will soon have to worry about 2 credit scores, not just one. You are entitled to one free credit report from all the bureaus as well as a free report any time you are turned down for credit. That site is http://www.annualcreditreport.com. As for the paid services, they are fairly expensive at $15.00 per month. Consumer Reports magazine suggests that if you want to monitor your credit throughout the year, stagger the free reports from the 3 bureaus throughout the year.
My husband and I monitor our credit scores on equifax.com, it’s 8.95 a month for each of us and I think it’s incredibly worth it! We have daily access to our Equifax FICO scores and our credit reports (when we make a large purchase it’ll show up on our report usually within 2 weeks), and making expensive purchases is that much easier when you already know your score.