What's this new VantageScore credit score?

The three major credit bureaus Experian, Equifax and TransUnion introduced the VantageScore in March 2006 to compete and replace the current FICO score system.

VantageScore has one big thing going for it: It's easy for consumers to understand. VantageScore scores are on a scale of 501 to 990. If your score is in the 900s, you have the credit equivalent of an A and you'll get favorable interest rates. If your score is in the 800s, that's the credit equivalent of a B, with slightly less-favorable rates.

The credit bureaus say they've introduced this new system so that the scores being reported to credit grantors are consistent and easier to interpret.

But some observers say that the new scoring model won't change the biggest problem consumers face when it comes to credit scoring -- inaccurate or incomplete data in their individual reports

To understand what that means, you need to know that while we all get a score generated from each bureau, how those scores are determined can vary greatly. That's because each bureau uses a different formula to generate the score it sells to lenders.

The scores under the new system could still cause a huge spread in scores. Credit scores are generated using information in your credit files. Each file can have all the same information or vastly different data.

One creditor may or may not report all your information to all three bureaus. Or one of your files might be missing the maximum limit on your credit card, making it appear as if you are overextended.

The new score was just introduced last week, and adoption is gradually moving along. The credit bureaus plan to replace the proprietary scores at their Web sites with the VantageScore over the next few months, but right now they're focusing on marketing the score to lenders.