Credit Score Articles Vantage Score: The New and Improved(?) Credit Scoring System Tip! Instead of opening up a number of credit cards to raise a credit score, find a credit card with a low APR to consolidate onto one credit card. However, caution is advised on people with a short credit life in opening a number of credit cards because it can ultimately lower a person's credit score, accounts for 15 percent of a person's credit information. There is a new credit scoring system in town. It's called Vantage Score and will make understanding your credit score as easy as understanding your report card was in high school. At least that's the plan. The three major credit agencies, Experian, Equifax, and Trans Union announced on March 14, 2006 that they would be adopting the new system and rolling it out to banks, mortgage lenders and credit card companies immediately. "There's clearly been a need out there to have a consistent scoring model that works across all three reporting agencies' data," said Kerry Williams, group president of Experian's credit services division. "And consumers need a consistent score that they can understand and use in their own financial lives." It was developed as a joint project between the three agencies and marks the first time the three have used the same scoring system. In the past even if all three agencies had collected exactly the same data, the scores each arrived at could vary significantly. This is because each used it's own proprietary scoring model, developed internally. With Vantage Score each will use the same method to arrive at a score. This means that any variance will be due to different data being collected. Many consumers are unaware that not all businesses report credit issues to all three bureaus, just as not every business pulls credit reports that merge the three agencies into one report. Tip! Manage your credit card balances. It's best for your credit score if the balance on a given card is less than 50% of the limit on that card. Virtually every mortgage lender looks at all three scores and makes its decisions based on the middle score. It is important to note that it is the middle score not the average of the three that becomes your effective score in the mortgage industry. Under the old system scores range from 350 - 850, with higher scores meaning a higher level of creditworthiness. With Vantage Score higher scores still mean more creditworthiness, what is different is that there will also be a letter grade assigned. The new range is from 501 - 990 and the grades will be as follows: 901 -990 = A 801 - 900 = B 701 - 800 = C 601 - 700 = D Tip! Any new credit: How much credit have you recently applied for and been granted. They will also look at how many enquiries have been made concerning your credit score. 501 - 600 = F While this new system may seem simpler at first several consumer advocacy groups have expressed concern regarding the accuracy of data gathered. Citing the old ‘Garbage In, Garbage Out' adage, and expressing concerns over the accuracy of the data more than the scoring system itself. The old system will still be around and in use while it is unclear how much the new system will be adopted. What will remain true is what it takes to establish and maintain good credit scores under either system. Do not carry too much debt, pay your bills on time and avoid excessive credit inquiries. Steve can be reached at steves@viewpointfinance.com and (909)238-3787 Steve Scheunemann is a veteran of the United States Marine Corps, having served during Desert Storm and in Operation Restore Hope in Somalia as a helicopter crew chief. He served on active duty from 1987 through 1993 and as a reserve Marine until 2000. He is also a former police officer, and the son and grandson of career police officers. Tip! Check your credit score online with one of the official companies to see what or why your credit score is the level it is. This will help you determine what you can really do to increase your credit score. Along the way he has held a variety of jobs, from pet store manager, to technical instructor, and even as a cowboy on a cattle ranch, while simultaneously running a small farm with his wife Stacie. He is a dedicated husband and father to seven wonderful children, and has been a Cub Master with the Cub Scouts. Today he serves your interests as a real estate loan professional. A field he has been involved in for the last five years.