Re: Repositories announce new credit scoring system...
There are a different number of ways this could affect a borrower. First, each repository has different credit models that they use to generate a credit score. The credit model is basically the gigantic complex equation they use to generate a score based off the different items in your credit history. <br /><br />The interesting thing about that is that all three repositories could have identical information and come up with three totally different scores. By standardizing the models there will be no muddyness in the determination of the scores. X will always equal Y.<br /><br />How does that affect you? Well, companies like mine use a 3rd party company to generate a credit report. That 3rd party company often has the ability to select different credit models. As an example, the 3rd party company we use switched to a new model called "Classic 04" for the TransUnion credit repository. When they switched to that model, we noticed borrower credit scores were significantly lower as compared to the Experian and Equifax repositories scores. At times, the difference was up to 60 points lower. When we called and asked them to switch back to the "Empirica" credit model, the scores from TransUnion went back up. The lower scores would often cause people to get lower rates since they were in a different credit tier.<br /><br />By standardizing these scoring models, you can be sure you are getting a reliable score, thus getting the interest rate you deserve.<br /><br />Sean
