The article "New Credit Score System Supposed to Simplify, Not Confuse" talks about credit, it was created by Charles Essmeier.
A lot has been written in the past few years about the importance of both credit reports and credit scores. The credit report is a listing of all significant financial transatcions by a consumer and whether or not those transactions were completed on time and as agreed. The score is a distillation of everytihng contained on the credit report, boiled down to a three-digit number.
That number is supposed to indicate to a creditor or a lender, at a glance, whether or not the consumer in question is worthy of another loan.Until recently, the three major credit bureaus, Experian, Trnas Union and Equifax, all used different but similar systems to devise the credit score, which ranged from 300 at the low end to 850 at the high end. The different systems meant that a consumer checking his or her score with each of the credit bureaus would receive three different credit scores. This led to confusion as to which score was the "correct" one. The bureaus have yesterday attempted to sovle that issue by creating VantageScore, a unified scoring system that all three bureaus will use. This should result in a consumer receiving the same score no matter which bureau provides it.But this hasn't entirely stopped the confusion over credit scoring. Unlike the old systems 300-850 range, the VantageScore uses a different scale that ranegs from 501-990. In addition to the numeric score, the VantageScore sysetm will also provide a letter grade, ranging from A-F, as follows:901-990 - A
801-900 - B
701-800 - C
601-700 - D
501-600 – FNow the source of the confusion has changed. Many persons have erroneously assumed that a score in the old system will be transferred to the new system.
That means, to their way of thinking, that a top scroe in the high 700s or low 80s under the old system is right now merely "average" under the new one. How, persons are wondering, did a top score suddenly become mediocre?The answer, of course, is that it did not and that comparisons between the old sytsem and the new one are like comparing apples with oranges.
The new system is complteely different and will use a new set of criteria to create the new score from the ground up. A score in the 800 range under the old system will almost certainly become a score in the 900 range under the new one. Conusmers have no reason to be alarmed, and in time, the new system will be better and more easily understood than the old one. After all, nothing tells you that you have done well better than being told that you have recevied an "A".©Copyright 2006 by Retro Marketing.
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.Com, a Internet site devoted to debt consolidation, personal bankruptcy, establishing credit and credit counseling and HomeEquityHelp.Net, a Internet site devoted to infromation regarding mortgages and home equity loans.
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