Four Things To Know About The New Credit Score Everyone Is Talking About

It's a completely revamped version of the original VantageScore, which is a generic credit scoring model that has been around since 2006. It was launched as a joint effort by the three major credit reporting agencies (Experian, TransUnion and Equifax).

We've checked out the stats on the new model and we have to admit there are some fairly intriguing changes.

Here's what you should know:

It won't count debt collection accounts that have been paid off.

VantageScore will now be the only credit score that doesn't track debt collection accounts that have been paid in full. This is huge. Just because a consumer has paid a debt in full to a collections agency doesn't erase that history from their credit account, and credit scoring models like FICO still let that negative account factor into a consumer's credit score. The VantageScore would essentially wipe the slate clean once collections are paid off, which could be a boon for consumers who are working to rebuild their credit history after a rough patch.

Millions of consumers who never qualified for credit scores will have a shot.

With the VantageScore 3.0, up to 30 million consumers whose credit histories weren't long enough to qualify for a traditional FICO score will now be eligible. For example, the new model will look back 24 months into consumer credit history to track any credit activity, and it includes activity from people whose last credit transaction is less than six months old. This could be the gateway out of the subprime lending market for tens of millions of under- and un-banked consumers in the U.S.

It's adopted the same scoring scale as FICO.

The old version of this scoring model used a different point scale (501 to 990), which might have confused people who were used to seeing FICO's 300 to 850 point scale. That's no longer the case.The new VantageScore has adopted the same scale, which will not only make it a little more familiar to consumers but also make it easier for lenders to digest when they're sussing out potential borrowers.

It won't count negative history for customers impacted by natural disasters.

In the wake of recent disasters like Hurricane Sandy, banks and lenders were willing to give customers a break on fees for a period of time. The VantageScore has taken a page from their book. With the new score, they have the ability to negate any account activity that may potentially harm a customer's credit score if it occurred during a natural disaster.

What's next?

The question that remains is whether all major lenders will get on board with the new VantageScore. According to the company, seven of the top 10 financial institutions, six of the top 10 credit card issuers, four of the top 10 leading auto lenders, and four of the five leading mortgage lenders accept VantageScores to vet potential borrowers. There's obviously room to grow.

There will be more information on the new VantageScore coming soon, and we're curious to see if FICO might even tweak its scoring model to compete. For now, more info is available on purchasing a VantageScore from credit reporting agency Experian. Consumers still have to pay for credit scores, but www.annualcreditreport.com is the place to go to get your free credit report each year.