Major Credit Bureaus Adopt Uniform Score    
Industry News
The three major consumer credit reporting agencies announced today that they have created a new credit scoring system to simply the loan process for both lenders and borrowers.

Equifax, Experian and TransUnion said during a conference call this morning that the new "VantageScore" is a direct result of market demand for a "more consistent and objective approach to credit scoring." The agencies in the past each used separate proprietary formulas to create credit scores, meaning a lender dealing with a consumer's application for a credit card or a mortgage might have to reconcile three widely different scores.

With the new system, a single methodology will be used to build the scores. "Under the new scoring system, credit score variance between credit reporting companies will be attributed to data differences within each of the three consumer credit files and not to the structure of the scoring model or data interpretation," the agencies said in a joint statement. VantageScore will provide consumers and businesses with an easy-to-understand, highly predictive and consistent score. The three credit agencies called the move to a unified score as "unprecedented."

Credit scores are important because they measure how much debt a consumer is carrying and how well the consumer keeps up with bills. The higher the score, the more creditworthy the consumer is considered and the lower the interest rate the consumer is likely to be charged.

The scores under VantageScore will range from 501 to 990. The top end is slightly higher than scores currently in use. In a separate statement, Experian said the new scores will be grouped on a familiar academic scale. Experian gave these groupings: A = 901-990; B = 801-900; C = 701-800; D = 601-700; and F = 501-600.

Experian hopes that as consumers continue learning about credit scores and credit reporting, the consistency of VantageScore will offer information needed to evaluate their credit standing and make sound financial decisions. Kerry Williams, group president of Experian's Credit Services, said in the statement that the new approach is a progression of efforts to satisfy client and consumer needs.

VantageScore is being independently marketed and sold separately through each of the three national credit reporting companies via licensing agreements with VantageScore Solutions LLC, the joint announcement said. It said the new scores would be available immediately.

The credit reporting agencies are operated by Equifax Inc. of Atlanta, Experian Information Solutions Inc. of Costa Mesa, Calif., and TransUnion LLC of Chicago.
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