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Setting a New Score

There are changes coming to a popular credit scoring model

For those who have seen their credit score shrink under the crushing weight of debt, there’s good news on the horizon. Changes are coming to the Vantage Score, the credit scoring model used by the three big credit reporting bureaus TransUnion, Equifax and Experian. The changes will place more emphasis on trends and less on hard numbers.

According to The Washington Post, the new Vantage Score will consider a consumer’s habits to get a better grasp of their financial stability. For example, if a person has been consistently paying down debt, that will help their score. On the other side, if a person consistently adds new debt, that will hurt their score. In the past, two people who both are using 50 percent of the spending limit on their credit cards are seen as equals by Vantage Score. That’s because lenders like to see that consumers are using less than 30 percent of their card limit. However, under the new model, if one of those people has been regularly paying down their debt and the other has not, the person paying down the debt will have a higher score.

Even with the new scoring system coming, the old ways to boost your score — pay bills on time, pay off your credit card balance each month, etc. — are still in play. The new scoring model is a nice change though. People can change and get their acts together, even if the hard numbers don’t show that right away. And note: These changes won’t impact you if you’re shopping for a mortgage. Mortgage lenders use the competing FICO score.

Chris O'Shea

Chris O'Shea