Your Credit Score has Changed

Just as I was getting use to the old algorithm, now a new algorithm!

The nation’s three consumer credit reporting companies – Equifax, TransUnion and Experian – announced a new credit scoring system designed to simplify and improve the credit process for both borrowers and credit grantors.

By combining cutting-edge, patent-pending analytic techniques with a highly intuitive scale for scoring, VantageScore will provide consumers and businesses with a highly predictive, consistent score that is easy to understand and apply. VantageScore uses score ranges from 501 to 990.

There is more information on VantageScore here: VantageScore.

There has been much talk about providing borrowers and business with a more consistent method of evaluating credit. For even the most experienced people in the lending industry, credit scoring is a confusing subject. A few weeks ago I gave a presentation with Mark Armstrong, American Reporting Company to a group of real estate agents, and my impression was that they seemed starved for accurate information on the subject of credit. In the next few days, I will post parts of that presentation here.

UrbanDigs has more.

10 thoughts on “Your Credit Score has Changed

  1. Todd,

    Tell us more about Fair Isaac! I did a google search and it appears that they run their own version of a credit score.

    How does it relate to VantageScore? Is it a competitor?

  2. Dustin,

    VantageScore is not a competitor of Fair Isaac. As I understand it, VantageScore is an “extension” or “evolution” of Fair Isaac. It is hoped that VantageScore will provide more commonality to the three scoring models currently in place.

    FICO scores have different names at each of the credit reporting agencies. All of these scores, however, are developed using the same methods by Fair Isaac.

    The three reporting bureaus and their scoring models:

    Equifax has BEACON
    Experian has Experian/Fair Isaac Risk Model
    TransUnion has EMPIRICA

  3. FYI: I know there are lots of places out there that will give you your credit score for “free” (assuming you eventually decline the service) and you can get your credit from the credit agencies by writing them a letter, but you can also get a pretty good look at your credit rating by signing up as a borrower at It’s a 5-10 minute process and costs you nothing (even if you don’t cancel your account). Some people use the site to borrow money for down payments (!)

    Is there an even easier way to get a free credit score that I don’t know about?

  4. Galen,

    Not that I know of.

    Have you been to I haven’t carefully looked around the site, but I’ve been told that a person can get a credit report for free, but NOT a score.

  5. Grier, I have heard mixed opinions about the affect running reports has on your score. I still counsel people not to let 10 different lenders run their score when they are looking for and comparing lenders. I tell them to get a quote based on a “stated” mid score once they know that number.

    What’s your opinion on this topic?

  6. Ardell,

    Looking for a mortgage may cause multiple lenders to request your credit report, even though you’re only looking for one loan. To allow for this, the score counts multiple mortgage inquiries in any 14-day period as just one inquiry. So from the stand point of shopping for a mortgage, it’s not the quantity of inquires, it’s the time frame in which inquires occur. In addition, the score ignores all mortgage inquiries made in the 30 days prior to scoring.

    When getting quotes, I like your idea of a “stated” mid score once the borrower knows that number. It minimizes the number of times the borrower gives out their social security number, and that’s important from an identity protection standpoint.

  7. Vantage Score will compete with Fair Isaac (FICO). VantageScrore and Fico use two different sets of calculations to come up with a score. The patent of this new formula knocks out the middle man for the 3 big bureaus. Instead of all of them using FICO, they now all own their own formula that they hope will dominate the lending market. I think this will take the lending market a while to migrate if it ever does. All software and underwriting guidelines are based on the FICO. This would be quiet an undertaking and I would think expensive for mortgage lenders alone to change. The same problem that FICO has always had will inevitably be a problem with VantageScore; not correct information being reported. If one has incorrect information then the score is still miscalculated. Any consumer that has dealt with disputing a knick on their report will still have to with VantageScore.

    Also, Ardel,

    For mortgages specifically getting multiple reports is usually okay if they are all run within 30-40 days of each other. When a mortgage company runs credit it is evident that it is for a mortgage. I am not sure of the specifics but if you look at a report you can see if a creditor is revolving, real estate, installation, or auto. Different reports call them different things but mortgages come up as MTG or Real Estate.

  8. Denise,

    I respectfully differ with you on the matter of the running a credit report for a new mortgage multiple times in “30-40 days of each other”.
    I stand by the information that I provided in the earlier post. I would refer you to and the “Credit Education” link.

    If you have information that says… “it’s usually okay if they are all run within 30-40 day of each other”, I’d be interested in you directing that to me.

  9. The Vantagescore is just an invention by the credit bureaus designed to fatten the wallets of their primary customers…THE LENDERS. I have no doubt that the Vantagescore will significantly lower credit scores across the board..thus allowing creditors to raise interest rates on existing revolving accounts, disqualify on prime offers (0% interest), and baulk at offering the lowest mortagage rates. My FICO was 744, but the Vantagescore rates me as C. My primary reason for a lower score? My “average loan amount across open, recently reported reasl estate accounts” is too low. WHAT? So I get a lower score because I only borrowed 175K to buy a house instead of 300K? What kind of BULLsh*t is that?????

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