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How Does The New Credit Score Benefit Consumers?

The three major credit bureaus ( Equifax, Experian and TransUnion ) formed a joint venture to develop a new method to compute a credit score. The new credit score is called the VantageScore. It is an attempt by the three credit reporting agencies to challenge the present FICO score.

The VantageScore was developed to profit the credit bureaus. It was not created to benefit consumers. Presently, the credit bureaus have to pay a royalty to the Fair Isaac Corporation every time they have to calculate a credit score. By having their own scoring method, the royalty payments are removed and profits increase.

The VantageScore does not solve the problems which are inherent in the present FICO credit score system. Both scores are computed from the information collected and stored by each of the credit bureaus. Credit bureaus do not have the same information. Creditors do not subscribe to the same credit bureaus. The difference in data information causes different credit scores to be reported by each of the credit bureaus.

Both the FICO score and the VantageScore are plagued by incorrect and incomplete information reported to the credit bureaus. The credit bureaus are information brokers. They do not verify the information that they collect. It is the responsibility of the consumer to make sure that the information is correct.

The Vantage score gives lenders the flexibility to deceive consumers. Lenders

will now be in a position to confuse unsuspecting consumers. If the VantageScore is less favorable than the Fico Score, they will use it to charge higher interest and make more money for themselves. They will tell consumers that they do not use the Fico method to make assessments.

The new Vantage score will also cause confusion. The new scores range from 501-990 with a grade letters assigned as shown below:

A:901-990

B:801-900

C:701-800

D:601-700

F;501-600

Under the Fico system a score of 780 would be considered excellent and qualify for great interest rates. However, under Vantage you would have a C score and not be subject to the same benefits.

How can this new score benefit anyone?

Norman Kay is a contributing writer at recreditize where he gives free advice on credit reports This article is free for republishing
Source: http://www.articlealley.com/article_152623_19.html


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