Credit Scoring System May Change

In evident response to consumer complaints, the three main credit reporting agencies have decided to change the way your credit score is calculated and scored. In the past you could have different scores with all three companies (lenders would use the middle score). This system has been a thorn in the side of consumers for years and is largely hidden from view, which is its main problem.

No word yet on when this new system will be implemented (it may already be in place) but here are some details:

"The three major consumer credit reporting agencies recently unveiled a new way of calculating credit scores, introducing A through F letter grades designed to give consumers a better idea of where they stand.

With the new system, a single methodology will be used to create the scores for all three credit bureaus. Credit scores traditionally have been three- digit numbers that lenders used to evaluate the creditworthiness of borrowers. Current scores range from 300 to 850.

The new credit scores will be issued on a scale ranging from 501 to 990, with higher scores being better. To help consumers better understand the scores, they are also assigning them letter grades: A score between 901 and 990 is an A, 801 to 900 is a B, 701 to 800 is a C, 601 to 700 is a D, and 501 to 600 is an F."

Recent information indicates that this change is still a ways off. I'll pass along more information as it becomes available.

Richard