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Heads up consumers the three major credit bureaus have created a brand new credit score.
The new model has the potential to boost scores of countless Americans who have little or no credit history.
John Alzheimer consumer education president -- -- credit dot com joins me now with details.
So add the three biggest credit -- bureaus in the country Experian Equifax and Trans Union got together why did they need yet another credit score.
Yet they banded together in 2006 and created vantage score an advantage scores now managed by -- -- fourth company called vantage score solutions.
And essentially demand score is a competitor model to the industry standard which a stealth -- out.
Right so we get a -- -- score out here and you say there are advantages for consumers -- Friday.
Yeah there's a few advantages for consumer start stop the vantage score now ignores collections that have a zero dollar balance which means if the collection is paid or saddled.
And then updated on your credit report to show that has no balance they -- then did you vantage score basically ignores it as if it doesn't address.
-- which obviously consumers are going to a lot of hands collection agencies are probably going to love more.
Because now it's an incentive to pay or subtly or collection accounts -- -- that exactly the second thing that's kind of a big -- I did -- -- on the -- our bit and I still think it's pretty important is is they have built in some logic into the model.
That essentially protects the consumer from the -- -- -- natural disaster.
There is away for a credit go to note on an account on a credit report.
That the consumer has been displace or otherwise negatively affected by a natural disaster like hurricane sandy.
And if there's anything negative associated with that particular account.
Because are focused on something other than your credit right now.
On the vantage score -- essentially not allow that particular account to -- or credits or so wire focused on getting your life back together.
The obvious you shouldn't be focused on her credit reports and this is a way for them to help protect the consent -- and call me suspicious but I don't really understand why they're doing that's what fit for them.
Well there -- business and clearly it did the what -- them as they wanna cream off some of fight goes dominant market share.
And one of the ways to do it is to build your vs the scoring systems hopefully they will outperform in their minds anyway they'll outperform.
-- four of -- is look this is a performance business you don't pick credit scores as a -- because of what I just talked.
Yeah the consumer either you have very little control -- the credit scores that that companies use every day.
To decide whether or not they're gonna give -- a credit card or a home loan or whatever.
That's definitely -- fact -- the consumer cannot say what Bank of America I want eighty use this particular credit -- Or that particular credit bureau so.
Really at this point it's almost a crapshoot.
Might go let's be real honest about the spike there was still the industry standard that the dominance warmer but -- has done.
A pretty good job of really solidify -- second position.
They've got roughly thirteen hundred lenders using it according -- in the credit bureau Experian -- Let's talk a little bit of that annual credit report -- time they've got hacked in.
All kinds of celebrity information is out there including information about Michelle Obama Jay-Z and beyoncé Kim Kardashian you name it.
Now interesting lady.
From what I understand a lot of this information is is not accurate.
A reporter Fox News try to contact -- called the phone numbers that were released for Michelle Obama and others they're not accurate.
They -- the government offices in all kinds of places what do you make of the story.
This is interest and we talk about data breaches were normally talking about sophisticated ways of hacking into the back doors of companies in getting unauthorized access to their information.
What these guys dated may actually went through the front door.
They want to annual credit report dot com which is where we always advise people to go to get their free credit report once every twelve months.
And they basically and hurt the consumers information mostly celebrities and political folks.
And -- were able to believe it or not answer at the authentication questions accurately.
So that the credit reporting agencies believe that are really ones that person on the other end of the computer screen.
And and deliver the credit report to them.
And I can tell you what I've been around for a long time in this business and the authentication questions are multiple choice meaning that they ask a question and you have five choice -- to choose from.
And if you answer them correctly.
-- are going to believe that you have authenticated and send your credit report see you so it or not impossible to breaking and two.
Even just -- some normal trial and error and getting lucky.
Some I want to -- if that's just speaks to how it out -- accurate this these credit reports Rick what people are.
Because there was a lot of bad information and and -- ending any data that came out.
Just get out bad phone numbers bad bad GAAP numbers so it's -- Fascinating story thanks for coming on tonight John it's always good to see you appreciate your time.
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