Credit bureaus to change rating system

Sussex county - Three separate credit bureaus will no longer mean three different credit reports if a new scoring system works the way it is advertised. Robert Szladek of Starwin Mortgage Services in Newton presented a talk on the new system sponsored by the Sparta Athletic Club last week. He also provided tips on repairing bad credit. In a telephone interview before the seminar, Szladek said the new scoring system, called “VantageScore,” has just been released to banks, mortgage lenders and credit card companies. It is slated to be released to consumers by the end of the year. Under the new system, the numeric score will be increased to a maximum of 990, slightly higher than the current number of 850. Ratings will be reported on a grading system similar to what is used in schools: A = 901 to 990; B = 801 to 900; C = 701 to 800; D = 601 to 700; and F = 501 to 600. VantageScore will replace the three credit scores with one. Currently, Szladek said, each credit bureau, Trans-Union, Equifax and Experian, comes up with a score and the middle of the three is used. Under the new system, the same process will be used by the three credit bureaus to determine one credit score. However, Szladek said, the three main components to determine the credit worthiness of an individual - payment history, debt vs. credit line and the way credit is use - have not changed. In order for a consumer to show a good ratio of outside debt vs. credit line, Szladek explained, a person should have several credit cards with none of them charged to within 50 percent of the credit line. In addition, the number of inquiries a person makes for credit can impact negatively on his or her score. There are some steps consumers can take to improve their score under both the old and new system. Having a mortgage and a car loan and making prompt payments will improve a person’s credit rating. “Always pay your mortgage first,” he said. Paying down balances or consolidating debt also helps. Szladek advised against closing out credit card accounts when they have been paid off. The three credit bureaus designed the news system after consultations with federal, bank and credit union regulators.