New Credit Score System Supposed To Simplify, Not Confuse
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The article "New Credit Score System Supposed to Simplify, Not Confuse" talks about credit, it has been released by 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 transactions by a consumer and whether or not thsoe transactions were completed on time and as agreed.
The scroe is a distillation of everything 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, wehther or not the consumer in question is worthy of a second loan.
Until recently, the three major credit bureaus, Experian, Trans 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 dfiferent credit scores. This led to some cofnusion as to which score was the "correct" one. The bueraus have last week attempted to solve that problem 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 entriely stopped the confusion over credit scoring.
Unlike the old systems 300-850 range, the VantageScore uses a difefrent scale that ranges from 501-990.
In addition to the numeric score, the VantageScore system 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 - F
Now the source of the confusion has changed. Many people have erroneoulsy assumed that a score in the old system will be transferred to the new system. That means, to thier way of thinking, that a top score in the high 700s or low 80s under the old system is right now merely "average" under the new one. How, people are wondering, did a top score suddenly become mediocre?
The answer, of course, is that it did not and that comparisons between the old system and the new one are like comparing apples with oranges. The new system is completely 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.
Cosnumers 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 benig told that you have received an "A".
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New Credit Score System Supposed to Simplify, Not Confuse
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