Have you ever been in a restaurant when a mismatched couple openly feuded a few tables away from you? You weren’t directly affected by the sparring match, but chances are it was uncomfortable because you were trapped in the same eatery and forced to witness the whole sordid affair.

Well, the always strange bedfellows of Fair Isaac, the mastermind behind the FICO score the credit reporting agencies (who are themselves made up of an odd alliance of TransUnion, Equifax and Experian) are at it again. Worse, we, as credit consumers, are all trapped in the same restaurant with little hope of escaping their quarrel. Whether the fuedin’ twosome will merely frustrate us or make us very uncomfortable remains to be seem.

The pair have always had a co-dependant, can’t-live-with-them-can’t-live-without them relationship. The credit bureaus keep a detailed record of your credit history. But the problem is, when a potential lender wants to check a client’s credit, they don’t want to filter through pages of raw data to determine if the client was a good credit risk. So to help with this, Fair Isaac developed several algorithms to crunch this information and develop a numeric score to represent a person’s credit risk. The FICO score usually ranges from 300 to 850, the higher the number the better someone’s credit was.

While this arrangement is convenient for potential lenders, it wrangles the credit bureaus who have to pay Fair Isaac to use the bureaus’ own data and assign a number to it. The credit bureaus reasoned that it would be much easier (and a lot more profitable) if they developed their own scoring system, and weren’t forced to siphon off part of their profits to a third-party company.

Enter VantageScore, developed by the credit bureaus themselves. Like the FICO score, the new scoring system assigns a number value to your credit history. VantageScore’s points range from 501 to 990. Additionally, the score is assigned a grade designed to give creditors and consumers an easy way to know how good their credit is.

For example, a score between 990 and 901 represents an “A”, a score between 801 and 900 a “B”, a score between 701 and 800 a “C” and so on, down to a failing grade of an F.

The VantageScore system is currently in the test phase and is not currently in use. But once the system goes on-line, the bureaus are hoping lenders will stop using the FICO scores and switch to VantageScore, enabling them to keep their profits.

Though VantageScore was launched as a strike against Fair Isaac, it is easy to see how the duel between the two parties could catch a few consumers in the cross-fire. First consumers will have to learn a new scoring system. After 50 years of dominance, consumers understand a FICO score of 745 is a good score. But the same number with the new system isn’t so hot.

Further, while both scoring systems use similar scoring Cciteria , there are differences between the two methodologies, so a consumer may have a better score on one system that an other.

What’s more, the VantageScore system promises lenders that the new system will do a better of job of rooting out bad credit risks than the FICCO system. Exactly how it does this has yet to be seen, but some financial analysts worry the tighter net for people with bad credit will also unfairly trap a those with an average or above average credit history.

But whatever happens, one thing seems clear—the fued between the co-dependant pair won’t go away soon. Currently, FICO is used by 80 percent of the banks and 75 percent of the mortgage companies; the credit bureaus will no doubt be fighting hard to claim their share of the market. How uncomfortable the fight for become for consumers, the hapless bystanders, is unclear.

By David Plowman

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As we mentioned earlier, you have a right to receive a free credit history from each of the three major credit reporting agencies once a year by visiting www.annualcreditreport.com. If you think the report is inaccurate, under the Fair Credit Act, you have the right to dispute the charges.

To dispute the charges, you should write a letter to both the reporting agency and the company that provided the information to the credit agency. (It is especially important that you contact the credit agency’s source directly if you think you were the victim of identity theft.)

In your letter to the credit agency, mention each item you are disputing, and give a detailed explanation of why you are disputing the charge. Make sure to include copies of any supporting documents (such as police reports in the case of identity theft, or a notice of paid accounts if you believe a lender is erroneously stating you have not paid a bill.) Do not include your original documents; always make sure you send copies. Also include a copy of your credit report with the items you are disputing circled.

Send any correspondence to the credit agency via a return receipt or through a courier so you have confirmation that your letter has been received.

Once the credit agency receives your complaint, they must respond in a timely manner. They will usually refer the matter to their reporting source and ask them to investigate.

If their investigation finds there was an error, they must report the result back to the credit agency you filled your complaint with, and the other two reporting agencies. The credit agency must supply you with the written results of the investigation, and supply you with a copy of the corrected credit report. You may also ask that a corrected report be sent to anyone who has requested a copy of your report in the last six months. You can also ask that a corrected report be sent anyone who requested your report for employment purposes over the last two years.

Once the credit reporting agency has corrected your credit report, it cannot be changed back unless the agency receives written verification from the provider that the information is correct. The agency must inform you of any changes in writing, and provide you with the reporting agency’s name address and phone number.

If you do not resolve your dispute with the credit agency, you may ask that a statement of your dispute be included in the credit report, and that it is included in future reports. The credit agency may charge you a fee for doing this.

Your credit report may have a great impact on your ability to get reasonable rates on a loan, insurance or even a job. By checking your report and disputing any results that you believe to be inaccurate, you can help ensure that your report is correct.

By David Plowman

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