This Post is the last in a three part series of Posts on how Credit Scores are used and developed. The first two were “Credit Scores Where Did They Come From & What Are They???” and “Why Are Credit Scores Different Between Credit Reports & Reporting Agencies”.
VantageScore is a cooperative effort by the three major Credit Reporting Agencies Equifax, Experian and TransUnion. This development began in 2005 as a result of public demand for a more consistent, and objective way of producing Credit Scores, as well as an easier way to understand and apply them.
The hope is that VantageScore will accomplish those objectives by developing a scoring formula that will be used by all three Credit Reporting Agencies, since this is a combined effort by all three. Right now all three Credit Reporting Agencies use a formula that they each developed independently of each other, so we have three different ways of arriving at a Credit Score, and as a result three different scores per individual.
VantageScore will use a different scale for reporting credit scores. In stead of using a numeric value between 350 to 850, VantageScore will use letter values much like an academic grading scale A, B, C, D, and F. Each of the grade levels will represent a numeric range, for example:
However, VantageScore will still use the same criterion that is used now to develop Credit Scores as is now, but they will give different weights to these categories then is given to them under the present scoring system. Payment History will continue to be the category with the highest value, but Available Credit which now represents 30% of the value of a Credit Score, will only represent 7% of the Credit Score under the new system.
When VantageScore will replace the present Credit Scoring System is still unknown, but hopefully the change will accrue in the not to distant future. I hope these three Posts have given those that have read them a better understanding of Credit Scores as well as a better understanding of how to maintain and improve them.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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