Saturday, April 22, 2006

Consumer Advocates Have Mixed Reaction to New Credit Scoring System

Consumer Advocates Have Mixed Reaction to New Credit Scoring System

By Lydia Verret, Reporter

VantageScore(sm), a new credit scoring system, was recently jointly introduced by the three leading consumer credit reporting companies, Equifax, Experian and TransUnion. VantageScore is designed to simplify and improve the credit process for consumers and creditors with a more consistent and objective approach to credit scoring.

According to proponents, this new scoring model is supposed to utilize patent-pending analytic techniques to compare the differences in the three credit files (from the three major credit reporting companies) to provide consumers and businesses with a highly predictive and consistent score, which will be easy to understand and apply.

Consumers and creditors will recognize the following score groupings in VantageScore’s new credit scoring scale:• 901-990 A• 801-900 B• 701-800 C• 601-700 D• 501-600 FReaction from many consumer advocates has been mixed. Scott Bilker, author of Talk Your Way Out of Credit Card Debt! notes:

“Clearly, this is a new way for the credit bureaus to make more money selling information about us. Selling it to lenders, insurance companies, and to consumers. Of course, that information could help us, or hurt us, depending on how and why it's used. The good news for creditors is that it easier to have a single score instead of analyzing different scores.”

Time will tell if the new VantageScore system will replace the popular FICO credit scoring model that has been around for many years. According to Gerri Detweiler, a noted consumer educator and author of The Ultimate Credit Handbook:

“VantageScore(sm) is competition to FICO scores, but lenders tend to be somewhat slow to adopt new scores. In addition, I don’t expect the mortgage industry to quickly replace FICO scores with VantageScores. Competition, in an of itself, may not be a bad thing here."

VantageScore is now commercially available. It is being marketed separately by Equifax, Experian and TransUnion through licensing agreements. We welcome your comments about credit card and money issues in our popular credit forum!

Lydia Verret has been a reporter for for approximately a year, but has had a passion for writing for many years. Her writing career begin in high school as roving reporter for her school newspaper and yearbook. She is a proud mother of two daughters, one of which currently writes for her school paper, and resides in Memphis, TN. She also is proud to married to a firefighter who is quite the handyman. is the most comprehensive source for comparing credit card offers. is pleased to offer consumers free credit card ratings.

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