New Credit Score

There is a new credit score called the "VantageScore", developed by the three major credit bureaus, Equifax, Experian and TransUnion, to compete with Fair Isaac's scoring models (FICO), which is currently in use.

Many lenders are reluctant to begin using this new scoring method until more is learned about the product and how it will be adopted within the industry. Until this is determined, most lenders will continue to use their current credit score philosophy, based on the Fair Isaac scoring models provided through credit bureaus today.

According to Advantage Credit President Ron Litt, it could take years to move away from using FICO based scores, "While the new system has potential for improving consistency of scoring from top to bottom, most lenders, Government Sponsored Enterprises (Fannie Mae and Freddie Mac), the U.S. Department of Housing and Urban Development and the Federal Housing Association would have to retool their existing technology, retrain staff and make other significant investments to accommodate the change. Without immediate participation from these groups, adoption could be slow."

Litt also discussed the new score's level of acceptance by the industry. "Advantage Credit and other resellers can offer the new scoring model almost immediately, but the existing credit scores are so embedded that an effective change could take years," he said.