The biggest news this week is all about the announcement from VantageScore Solutions that its newest version of its signature credit score would include some very consumer-friendly updates.
As one of the first news organizations to report that VantageScore would be releasing the new version of its brand-name credit score, we took a look first at how the new credit scoring model might impact the industry.
Currently, the FICO score is known as the dominant credit score used by lenders. Vantage is hoping to change that by creating a new model that improves predictability by up to 25% for lenders, according to the company. The new score mirrors the current FICO credit score range, but has several important changes to make the VantageScore 3.0 a possible game-changer in the market.
Gerri Detweiler, Credit.com’s Director of Consumer Education, takes an in-depth look at the three major changes that VantageScore has made to create VantageScore 3.0, and what that might mean for consumers.
One of VantageScore 3.0’s biggest changes is how the scoring model treats collection accounts. These accounts, which occur when a lender or a business reports that a debt has not been paid and has been sent to a collection agency, have previously been treated as a very bad sign on credit reports. However, the new VantageScore model does not fault consumers if they have paid off a collection account.
This change could be a major game changer, especially for consumers who have been hurt by unexpected medical debts. As Gerri has previously reported, Credit.com receives many questions from consumers who have had a medical bill for, for example, a copay they didn’t know about or a doctor’s bill they never received, sent to collections. That one missed bill would affect their credit score for years. Once that bill is paid, the VantageScore 3.0 won’t penalize consumers for it.
Hackers have gone on the offensive the past few weeks, accessing and publishing the financial information of several celebrities, including Beyonce, Jay-Z and most notably, First Lady Michelle Obama.
The FBI, the Secret Service and other authorities are all involved in the hunt to find the hackers, who exposed many pieces of identifying information of these public figures such as their Social Security numbers, mortgage information and credit card accounts.
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