Published: Fri, June 23, 2017
Economy | By Melissa Porter

New Credit Scoring Model More Lenient on Debtors

New Credit Scoring Model More Lenient on Debtors

If you are in debt and struggling with your credit score, there is some good news for you. Major credit scoring model VantageScore will be undergoing some changes this fall, and it is expected to become more lenient on people with debt.

Introducing the New VantageScore

Developed by the three main credit bureaus Equifax, TransUnion, and Experian, VantageScore will soon place greater emphasis on the trends in the credit report of an individual. According to Jeff Richardson, a VantageScore spokesman, it will provide a clearer insight into how people are managing their financial commitments, and whether they are paying off or accumulating more debt. The new data will help lenders determine a person’s debt load and gain a more holistic understanding of his or her credit management behavior and risk level.

Impact of the New Changes on Borrowers

Under the existing credit scoring system, consumers who generally have good credit scores may be temporarily regarded as having more debt after making a major purchase. The updated version will take into consideration their histories of maintaining low card balances, and therefore, their credit scores will not be significantly affected by big purchases.

People who are trying to secure a mortgage will not be affected by the changes, because most mortgage lenders use FICO scores to determine eligibility. However, if you are getting a new credit card or auto loan, you may be required to use your new VantageScore. According to VantageScore, approximately eight billion of its credit scores were used from July 2015 to June 2016, which is a 40-percent increase from a year ago.

Improving Your Credit Score

The new VantageScore may not significantly change the measures consumers should take to boost their credit scores. Paying your monthly bills on time is still the best advice on how to raise your credit score. If you have debt, you should pay it off as soon as possible. However, the method of trying to improve your credit score just before you apply for a loan is not going to work, because the new model will factor in your tendency to carry your debt over from one month to the next.


Overall, the updated VantageScore will provide a more accurate assessment of people’s debt behavior and creditworthiness. It should be a welcome change for both borrowers and lenders alike.

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