The New Credit Score System
May 8, 2008
If you purchased your credit score from TransUnion lately or if you plan to do so soon, you will notice a change to the scoring system. In the past, you got a three digit number that ranged from 300 to 850. Now, you will get something different.
TransUnion now rates creditworthiness on a scale of 501 to 990. In addition to the number you will also get a letter grade on a scale ranging from A to F. This new system is called VantageScore, and it was developed jointly by the three credit-reporting bureaus: TransUnion, Experian and Equifax. It was developed to compete with the classic FICO score they all used in the past.
This new scoring system is bound to create some confusion. Most consumers are only familiar with the FICO score and know pretty much what it means in terms of getting good interest rates on home loans, auto loans and credit cards. Under FICO, the median is about 720. A FICO score above 720 is good, a score below 620 is sub-prime territory.
You can get your VantageScores, for about $5.95 each, through the websites for Experian and TransUnion. You can also get it through annualcreditreport.com. A FICO score costs about $14.95 each. While VantageScore may be cheaper, FICO is still dominant and most widely used by lenders.
It is important to keep up with your scores as they determine if you can get a new loan and what interest rate you will pay on that loan. Keep in mind that your credit scores are separate from your credit report. Consumers are entitled to a free credit report from each of the three credit bureaus every 12 months, credit scores are, however, are not free.