database connection problem

i am using vb6 and postgresql. i have connected this with odbc.

i have created two databases, one test1 and next is test2

when i create a database as
CREATE DATABASE test1
WITH OWNER = postgres
ENCODING = 'SQL_ASCII'
TABLESPACE = pg_default;
it works fine, it is connected through vb6
but when i create another database as

CREATE DATABASE test2
WITH OWNER = postgres
ENCODING = 'UTF8'
TABLESPACE = pg_default;

and is connected through vb6
it does not work, shows the error message
run time error- 3146
odbc call failed.

does the encoding parameter differs the connectivity?
what can i do to connect to the database test2
plz help
TIA