Each time you deal with a mortgage, buy a car or get a credit card the lender looks at your credit score. The higher it is, the easier it is to get a loan and to get lower interest rates.
Now a new credit scoring system could raise your score and help you establish credit if you don't have any. It's called VantageScore 3.0. It was created by the three major credit bureaus, including Experian in Costa Mesa.
"A new score like this is truly reflecting where we are today and how consumers are behaving in the marketplace," said Maxine Sweet, Experian vice president of public education.
Say you're a victim of a disaster, like your home burns down or you're caught in a natural disaster like a hurricane, and you can't make your debt payments. Those events are taken into account by VantageScore, which could improve your credit score.
Or let's say you have no credit history at all.
"In the past, they were shut out of that marketplace because they didn't have enough credit history to score, and the VantageScore 3 scores a great many more of those under-scored consumers," said Sweet.
In the past, paying rent had no effect on your credit score. But with this new credit-scoring system, that's about to change.
"Really has made a huge difference for a lot of consumers, not only to create a score for them, or to let them be scored, but also to raise bad scores," said Sweet. "They can offset some of the negatives in their past because they have this great positive account."
VantageScore will make its full debut in the middle of April. But the most popular scoring system now, the FICO score, will still be around. But not all lenders will necessarily use both.