New Credit Scoring System Could Cost Consumers Millions

Your credit score says a lot about you, and is a key factor in getting approved for mortgages, credit cards and even a job. But a new credit scoring system just released by the "Big 3" could create chaos and confusion inside a world that very few consumers even understand.

"We've just gotten to a point where consumers are starting to realize what a credit score is, and now they’re changing the rules," says Chip Cummings, CMC, a 23-yr. mortgage industry veteran and best-selling author. "What used to be a great credit score which garnered great interest rates, will now only get you a B- grade. That'll hurt."

To avoid confusion, disappointment and higher interest rates as a result of the new Vantage Credit Scoring System, consumers need to take the following precautions:

• Get a free copy of your credit report, including your credit scores (both FICO and Vantage), from each of the three major credit bureaus.
• Dispute any errors in writing via Certified Mail right away, and request an updated copy of your report.
• Before applying for any credit, ASK the creditor which credit scoring system model they use for analysis
• Know the difference in credit scores: FICO credit scores range from 300-850, where Vantage credit scores ranges from 501-990. A "high" credit score of 740 with FICO would only be marginal under the new Vantage system.
• DON'T close credit accounts to try and improve your credit score – it could end up hurting it.

The new Vantage Credit Scoring system, just released by the three major credit reporting agencies, Equifax, Experian and Trans Union, could cause major confusion in the industry. What used to be a good credit score, may now be considered "marginal", costing consumers through higher interest rates, shorter credit terms, and increased costs.

In addition, the new system will be run by the 3 reporting bureaus - not an independent third party such as FICO.

Important transactions, such as mortgage loans, auto financing, and credit card rates are tied directly to credit scores, and this could have a confusing effect on the marketplace.

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