The Consumer Financial Protection Bureau (CFPB) has released a study, "Analysis of Differences Between Consumer and Creditor-Purchased Credit Scores," comparing credit scores sold to creditors and those sold to consumers, conclusing that approximately one out of five consumers would likely receive a meaningfully different score than would a lender.
“This study highlights the complexities consumers face in the credit scoring market,” said CFPB Director Richard Cordray. “When consumers buy a credit score, they should be aware that a lender may be using a very different score in making a credit decision.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the CFPB to compare credit scores sold to creditors and those sold to consumers by nationwide credit bureaus and to determine whether differences between those scores harm consumers. This study analyzes credit scores from 200,000 credit files from each of the following credit bureaus: TransUnion, Equifax, and Experian. It is a follow up to a study the Bureau released in July 2011 that described the credit scoring industry, the types of credit scores, and the potential problems for consumers that could result from differences between the scores they purchase and the scores creditors use.
The study released today determined:
►One out of five consumers would likely receive a meaningfully different score than would a creditor: When consumers purchase their score from a credit bureau, the score they receive may be meaningfully different from the score that a lender would consult in making a decision. A meaningful difference means that the consumer would be likely to qualify for different credit offers—either better or worse—than they would expect to get based on the score they purchased.
►Score discrepancies may generate consumer harm: When discrepancies exist between the scores consumers purchase and the scores used for decision-making by lenders in the marketplace, consumers may take action that does not benefit them.
►Consumers unlikely to know about score discrepancies: There is no way for consumers to know how the score they receive will compare to the score a creditor uses in making a lending decision. As such, consumers cannot exclusively rely on the credit score they receive to understand how lenders will view their creditworthiness.
The CFPB will begin supervising consumer reporting agencies as of Sept. 30, 2012. The CFPB’s supervisory authority will cover an estimated 30 companies that account for about 94 percent of the market’s annual receipts. The CFPB’s examiners will be looking to verify that consumer reporting companies are complying with federal consumer financial law, including that the companies are using and providing accurate information, handling consumer disputes, making disclosures available, and preventing fraud and identity theft.