New Credit Scoring System may be Worse for Consumers

The three major credit reporting agencies (CRA’s) all give each of us a credit score, and those scores compete with a score created by the “Fair Isaac” company called your FICO score. Most major banks use FICO especially for mortgages, so the three CRA’s have decided they can compete more effectively if they all use the same system. It was announced yesterday and it will be called your “Vantage Score.”

Unlike FICO which goes from 300 to 850, the Vantage Score will go from 500 to 990. Anything in the 9’s is considered to be like an “A”, on your report card (8’s a “B”) , and so on down the line to “F”.

The CRA’s will now sell you your Vantagae score along with your FICO score and, naturally, all of these companies think you should pay them regularly to keep up with your score.

The Consumer Federation of America (CFA) argues that this new score will just makes things worse for most consumers because even though all CRA’s use the same system, they DO NOT give you the same score. Why? Because they usually have different data on their files. This is the main problem consumers face in trying to manage their credit: Errors on their CRA files.

We agree with the CFA, and on our main site we’ve provided you with detailed information on how to get, review and correct your credit reports from the three major reporting agencies.

This is well worth doing before you ever apply for a mortgage of any kind, especially if your credit scores borders on “sub-prime.”

The CFA did a study showing that a person whose FICO score fell below the 620 cut-0ff for a “normal” rate, might have to pay nearly three percentage points more on their “sub-prime” mortgage loan!

Read More: Your Credit Score and How To Increase It

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