It’s called VantageScore3.0.  VantageScore was established in 2006 by the big three reporting agencies.  Experian, TransUnion and Equifax.  This new credit score, if used by lenders will provide greater opportunities for consumers to rebuild their credit.  The new system is more consumer-friendly because:

1.    Debt you pay off to a collection agency will not count against you.  Under the current systems, when you pay off debt to a collection agency this is harmful to your credit score.  Under the new system when you pay off the debt your score is cleaned of the infraction penalty.  This is a huge help to people who are trying to rebuild their credit.

2.    More people qualify for a credit score.  It is estimated that 30 million people do not have extensive enough credit histories to qualify for a credit score.  This may also help the unbanked and underbanked populations.

3.    Negative history that was impacted by natural disasters will be discarded.  Undoubtedly welcome news for the gulf coast residents affected by hurricanes and the plain states residents affected by tornadoes.

These are all very welcome changes.  The question now is will financial institutions use these reports?  It is hoped that at the very least they will use this in combination with the Big Three’s current reports.