The three major credit bureaus announced on March 14, 2006 that they are adopting a new form of credit scoring called the Vantage Score.

The Vantage Score will be available immediately to banks, credit card companies and mortgage lenders. The score will be available for consumer use later on this year. The Vantage Score is different from traditional credit scoring by offering a more consistent type of score. Instead of Experian, Equifax and TransUnion using their own formulas to generate credit scores, they will now all use the same formula in the Vantage Score to make it easier for individuals to obtain one score in the marketplace instead of three different scores.

According to the official website, www.vantagescore.com, the new score leverages the collective experience of the industry's leading experts on credit data, credit risk modeling and analytics. By combining cutting-edge, patent-pending techniques with an intuitive scoring scale, Vantage Score provides consumers and businesses a highly consistent score that is easy to understand and apply.

The Vantage Score will be very similar to the traditional academic grading system. The score will range from A (best potential buyers) to F (worst potential buyers). The scores in relation to the letter grades will look like this: A= 901-990, B= 801-900, C= 701-800, D= 601-700, F= 501-600.

You may ask yourself. What does this mean for the continued existence of the credit scores the three companies have developed and marketed individually for the past few years? The old scores will still be an option in the marketplace, but the Vantage Score will provide a new and unique option. There will continue to be multiple scoring solutions in the market that meet business needs. Vantage Score will compete on the merits of its consistent, predictive power.

According to an article by the Associated Press, credit scores traditionally have been three-digit numbers that lenders used to evaluate the creditworthiness of borrowers. The scores reflect how much debt a consumer is carrying, how good they have been at paying back loans and how many credit applications they have outstanding. They are important because lenders use them to determine if they will loan money to consumers and at what rate. The higher the score, the more creditworthy the consumer is considered and the lower the interest rate the consumer will be charged.