Did you hear the good news? It was announced last week that Equifax, Experian, and TransUnion have teamed up to develop a new credit scoring system. Scores using the new system, dubbed VantageScore, will be available for purchase from the three major credit bureaus within a few months. Unlike FICO's scores that range from 300-900, VantageScore scores will range from 501-990 and can be compared to a typical academic grading system: 901-990 = A; 801-900 = B; 701-800 = C; 601-700 = D; and 501-600 = F. But do we really need a new credit scoring system?

One of the advantages being touted by the new system is scoring consistency across credit bureaus. Currently, your credit score will usually vary from one credit bureau to the next. A common algorithm should make the scores consistent across the board, right? Well, not exactly. Just because all three bureaus will be using an identical scoring algorithm does not mean that the results will be the same. There will still be discrepancies between scores from different credit bureaus because the data that is plugged into the algoritm differs from one credit bureau to the next. Some creditors report to one bureau. Others will report to two or all three. So a consumer will have a different credit report, and therefore a different score, from each of the three bureaus. This will still continue, even under the new VantageScore model.

What's more is that the vast majority of lenders have been using Fair Isaac's FICO credit scoring model for decades. A switch to the new VantageScore model is unfeasible and unlikely. Perhaps the 501-990 model put into the context of a typical academic grading system is a bit simpler to understand, but in fact, it's all quite arbitrary. For lack of a better comparison, I find this somewhat analogous to the United States government attempt at metrication by replacing the standard measurement system of feet, miles, gallons, etc. with the decimal-based metric system.

Bottom line: Admittedly, this is a great PR stunt by the credit bureaus to get us consumers to buy their new scores, but in truth, it doesn't seem like it's worth all the fuss. Just because the scoring system is changing doesn't change your credit history. Bad credit is still bad credit; good credit is still good credit; and one foot still equals 0.3048 meters.