New credit scoring model could be good news

FRESNO, Calif.

Financial experts say the new credit scoring model by VantageScore could help millions of people who have little or no credit history. "30 million consumers nationwide would benefit from this type of change in the system and thousands of families here in the Central Valley," said Martha Lucey.

Lucey is with the non-profit Clear Point Credit Counseling and she helps families deal with financial issues. She says this new model was launched by the three major credit reporting agencies in the hopes of creating a new group of potential customers. Historically credit card companies only looked at existing credit usage such as a mortgage, auto-loan and credit card payments. "With this change in the VantageScore not only do they look at credit based payment patterns they also look for payment patterns for other bills that you pay every month like your rent, utilities and cell phone bills to establish you are a good payer of your bills," added Lucey.

Money experts say the new system only works if certain lenders sign up. "Your landlord, the utility company and your cell phone provider has to be reporting this information to the credit bureaus so if you've got a landlord that isn't reporting, that's not going to help your score.

In the past any debt that goes into collections even when paid off stays on a consumers record for seven years but now this new model puts less emphasis on those debts paid in full.

Money managers say the change could help families who were hit by the economic downturn, move forward.

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