Tell Your Friends About ArticleMap.com™ Sign-Up Free  |Member Login  

article marketing
ArticleMap.com

Home | Finance | Credit


Are You Ready For A New Credit Scoring System?

By: Nocita Carter

Copyright 2006 Nocita Carter

Janet just ordered her free annual credit report and was excited about what she saw on her report. She decided to order her FICO score, and low and behold, her score increased over eighty points from the last credit report she ordered over a year ago. She had worked hard to pay off her credit cards throughout the year and was pleased at the positive results on her credit report. Janet was so excited that she finally figured out how to improve her credit report and FICO score. Unfortunately, as soon as she found out about her great credit report and FICO score, she ran across some information about a new credit scoring system that was going to be effective soon! She said to herself, I can’t believe it! I worked so hard on improving my score and now they come up with this!

Just when you thought you knew how to understand and obtain your FICO score, the whole credit scoring system is about to change! The three credit bureaus have decided to flip the script on us and have worked together to create a new credit scoring system. It’s called the VantageScore.

Why have the three credit reporting bureaus; Experian, Equifax and TransUnion decided to create a new credit scoring system? They claim the new scoring system will reduce discrepancies between your scores and the three bureaus. These bureaus indicate that the VantageScore, returns more accurate scores on consumers which may have a credit history which is limited.

Are the credit score ranges the same for VantageScore and my FICO score? No. The VantageScore will have a range from 501-990. For instance, a score of 901-990 is an A; 801-900 is a B; and 501-600 is considered an F.

The FICO credit scoring system has a range from 300-850. It appears that the VantageScore system may be tougher than the current FICO score. For example, if you have a FICO score of 720 you could get a 9% interest rate on a credit card you may have applied for. With the VantageScore, your interest rate for this same credit card may be as high as 20%!

The VantageScore became effective for commercial use on March 14, 2006. Time will tell, how effective this system will be for creditors and consumers. It appears that the new scoring system may be more advantageous to the creditors rather than the consumer, since the VantageScore ranges are much higher to qualify for a good interest rate. This would appear to allow creditors the ability to charge consumers more for products and services purchased.

As a consumer, make sure you become informed about the new VantageScore system and how it will affect you! Although the FICO scoring system can be still used by your creditor, they have an opportunity to choose which system they will review for your credit. Now there are two systems currently. How long the FICO scoring system will be around is anyone’s best guess!

Article Source: http://www.articlemap.com

Nocita Carter is a writer and web designer that creates websites providing informative tips on various subject matter including personal finance tips on your personal finances at www.personal-finance-tips-for-you.com



Please Rate this Article

 

Not yet Rated

Click the XML Icon Above to Receive Credit Articles Via RSS!

Additional Articles From - Home | Finance | Credit
Sign Up Free | Learn More
Submit Articles
Member Login
Top Authors
Most Popular Articles
Submission Guidelines
Ezine Notifications
Article RSS Feeds
Press Release
About Us
Link To Us
Contact Us
Privacy Policy
Terms of Service
Sponsored Ads:

Recommended Hosting

Related Sister Site:Health Article Directory
Submit Health Articles Now

Copyright © and All Rights Reserved.
Use of Our Service is subject to Terms of Service and Privacy Policy.



Powered by Article Dashboard