NEW YORK -- The three major consumer credit reporting agencies say they've come up with a way to make things easier for borrowers and lenders alike.
Equifax, Experian and TransUnion say their new credit scoring system - "VantageScore" - is the result of market demand for a more consistent and objective approach to credit scoring.
The agencies say that instead of having to reconcile three widely different scores, consumers and businesses will not get what they call "a highly predictive, consistent score that is easy to understand and apply."
Credit scores are important because they measure how much debt a consumer is carrying and how well the consumer keeps up with bills.
The higher the score, the more credit worthy the consumer is considered and the lower the interest rate the consumer is likely to be charged.
So far the three companies are providing consumers with limited information. The only information being put forth to consumers is that VantageScore uses score ranges from 501 to 990.
The scoring system is tiered in the following fashion according to Experian:
A -- 901-990
B -- 801-900
C -- 701-800
D -- 601-700
F -- 501-600
An Experian spokesman said the score would reflect a consumer's frequency of borrowing, delinquency in paying bills and other "file content," but had no specific weights for the components.
One company, TransUnion, says access to the new scores will be available to consumers "later in the year." Experian also said the information would be available to financial institutions quickly but not available to consumers until later in the year.
Unlike the FICO system, where there is plenty of information for consumers to use in perhaps improving their scores; there is none of this information currently being made available to consumers.
In the case of TransUnion, businesses can have access to the new scoring system right away.
Information provided to businesses says VantageScore