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Get your 'new' credit score before you buy a loan

"Today" financial editor Jean Chatzky explains the new scoring process and offers tips on how to keep your score in good shape.

Just when you thought you were starting to understand your credit score, the three credit bureaus are throwing a monkey wrench in the works.

Equifax, Experian and TransUnion recently announced that — working together — they are launching a new score called VantageScore. Available to credit grantors immediately and to consumers once creditors start using it, the program, according to a joint press release, is designed to "simplify the credit process for both consumers and credit grantors." They'll do this, the companies explained, by all using the same methodology — the same formula — to compute this one score.

That's not how it works today. Currently, consumers who want to learn their credit score can buy one from any of the three bureaus (which gather credit data) as well as from, the Web site of Fair, Isaac and Co. (FICO), the company that first turned credit data into the scores that lenders use to make their underwriting decisions.

Right now, the scores are all computed on a scale of roughly 300 to 850, but not all scores are the same. Your Equifax score is likely different from your Experian score which is likely different from your TransUnion score. All three bureaus use different formulas to compute their scores. But also because not all creditors report data to all bureaus. By using the same formula, VantageScore will solve the first problem, but not the second. Still, TransUnion Spokeswoman Colleen Tunney says: "We think variance in scores will be reduced by 30 percent.

The other problem the new score doesn't address is the issue of consumers having access to the same scores that lenders use. Right now, 75 percent of mortgage decisions are based on an actual FICO score; lenders buy them from Fair, Isaac. Logically, if you're going to be applying for a loan from one of these lenders and want to know what sort of rate you'll be able to qualify for, you should know your actual FICO score as well. That means buying one from or from Equifax, the only bureau to sell an actual FICO score.

The bureaus hope is that lenders will see that this new score is so predictive — that it does such a good job of showing which consumers are good risks and which ones are not so good — that they'll start to buy this one instead. If that happens, if VantageScore achieves critical mass, then it should be the one consumers ultimately turn to.

Until then, though, there will likely be another new score in the mix. And consumer advocates already believe it will be problematic. Why? The bureaus have introduced a new scale. Rather than sticking to the SAT-like score where anything close to 800 is a homerun, they've introduced a scale that starts at 501 and ends at 990. They believe it should be easier to understand because it works like grades in a classroom. Anything from 900 to 990 is an A, which is excellent, anything from 800 to 899 is a B, which is pretty good and so on. Stephen Brobeck, executive director of the Consumer Federation of America, disagrees. "It's a terrible idea," Brobeck says. "At a time when consumers are just beginning to understand the traditional credit score scale, to change it radically will greatly increase consumer confusion."

For now, what should you do if you want to know what your credit score is? Go to or and buy one for $14.95, or — if you will be applying for a big loan like a mortgage in the next six months — buy all three for $44.84. (You don't want one low score to sink your chances of qualifying for a good rate on that loan; and it's tough to tell which score the lender will pull.)

Then, do your best to bring that score up by:

Jean Chatzky is an editor-at-large at Money magazine and serves as AOL's official Money Coach. She is the personal finance editor for NBC's "Today Show" and is also a columnist for Life magazine. She is the author of four books, including "Pay It Down! From Debt to Wealth on $10 a Day" (Portfolio, 2004). To find out more, visit her Web site, .