More news about the VantageScore

Newspapers across the country are full of news about the launch of the VantageScore by Equifax, Experian and TransUnion. While most articles refer to this launch are a positive step, reactions are mixed. Here are some of the benefits and downsides to the new scoring system:

Benefits of the VantageScore

• The creation of an "authorized credit score" could cut down on consumer confusion over the hundreds of different credit scoring models used today.
• The credit bureaus will start retailing the same credit scoring formula. This means that your credit score will be calculated the same way not matter which credit bureau you use to purchase your credit data.
• The implementation of one consistent credit score means that consumers are more likely to have an accurate picture of their score and how lenders will view their credit.
• The VantageScore was designed to make the credit scoring system simpler for consumers and businesses.

Downsides of the VantageScore

• The VantageScore will not be available for consumers to purchase for at least a few weeks. It may not be widely available for up to a year.
• The FICO Score will continue to compete against the VantageScore for market dominance. Currently, 75% of mortgage applications are evaluated using FICO scores. 
  
• Many large banks and financial institutions have developed their own credit scoring formulas for evaluating consumers and would likely be resistant to giving up these models. And don't forget that insurance risk scores and other business-specific models will still exist too.
• Credit scores are still not included free in the annual credit report disclosures.
• According to the Director of the Consumer Federation of America: "It's a terrible idea. At a time when consumers are just beginning to understand the traditional credit score scale, to change it radically will greatly increase consumer confusion."
• Credit scores can still vary significantly based on the information contained on the customer's credit reports. Since the credit bureaus do not share information, your credit data can be very different on each report.
  
• It doesn't appear that any major improvements to the credit scoring and reporting system are included in this new launch. The VantageScore will likely be very similar to existing score models.
  

Despite all these potential positives and negatives, it seems that consumers are not very interested in the launch of the VantageScore as yesterday's comments section indicated. Instead of changes to the way the credit scoring business works, consumers seem to be more interested in improvements to the way that consumer credit data is used, evaluated and stored.

What do you think about the VantageScore? Do you think it will really become the industry standard? Share your feedback in the comments section below.

Comments

[howard isaacs]

I am confused..All three CB report different info..Will the Vantage Score combine the history from one CB to the next..then they will be factored into the Vantage score??
I have an 11 yr history with EXP and 5 with TU..How will that factor into this new score model.

[EmilyPeters]

You'll still have three different credit reports and three different credit scores with the new VantageScore. All this new score does is replace the unique credit scoring formulas that the bureaus currently use with one standard scoring model. When you buy your credit score from Equifax, Experian and TransUnion in the future, they will all be calculated using the same formula.

Does this answer your question?