Transparent and consistent credit transfer procedures are essential if EU Universities are to successfully build the European Higher Education 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 member states, this paper examines the problems in 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 national systems are usually criterion-referenced, the 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, this 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. The latter masks this diversity and is flawed in calculation and ad hoc in operation.