Transparent and consistent credit transfer procedures are essential if EU Universities are to successfully build the European Higher Education Learning Area and thrive in the emerging global knowledge economy. Currently the European Credit Transfer System is the most widely used mechanism to enable credit transfer between universities in different EU nations. Using data from 20 universities in four EU states, this paper examines the problems of calculating and using ECTS grades. The results demonstrate that the alignment of ECTS grades varies within nation states and show that, despite the fact that ECTS grading is a norm referenced system, while the national systems are usually criterion referenced, many ECTS conversion tables provided by universities indicate straight line transference from institutional to ECTS grades . Given the anticipated increase in student mobility following the EU enlargement to 25 nations, the paper proposes a re-alignment of ECTS towards a criterion referenced system. Such a new system would acknowledge and build on the diversity of EU higher education systems, unlike the current mechanistic system, which both masks this diversity and is flawed in calculation, and ad hoc in operation