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