Credit lenders may be seeing different numbers than consumers who purchase them
San Francisco, CA -- (SBWIRE) -- 10/04/2012 -- At least a quarter of individuals who seek their credit score may be getting a different number than their potential lenders see.
The Consumer Financial Protection Bureau conducted a study that found as many as 25% of those who request their score are receiving a “meaningfully different” number than the numbers seen by lenders.
Clearly, the disparity between the two numbers may cause individuals to assume erroneously when it comes to their credit score and ability to borrow. Money can be wasted when applying for loans that they would have no chance to qualify. Those who underestimate may be willing to accept rates that are worse than deals they could gain.
Congress mandated the study, which highlights the importance of consumer understanding when it comes to attaining credit scores. It is unclear if Congress has any planned steps to rectify the issue.
Free credit reports are available once per year from Annualcreditreport.com; however, individuals are not entitled to a free credit score, barring specific exceptions.
Borrowers who want a proper credit score likely have to buy their own as part of credit-monitoring package along with the credit report.
While some websites do offer free credit scores, these are usually what are called educational scores, and are often not the same numbers that lenders will use.
Each of the lending bureaus has proprietary scoring models, which go by varying names. Scores that are requested by individuals are often receiving the educational scores.
Adding to the difficulty for the user is the fact that different models will utilize different ranges. Scores in the Fico system range from 300 to 850. VantageScores will tend to range from 501 to 990. Thus, a Fico 800 score is higher than a VantageScores 800 score.
The study sample utilized 200,000 consumer credit reports. The scores were generated using various scoring models. Fico scores to lenders with the alternative scoring systems that they provide to consumers.
The study concluded that 73% to 80% of the time, the scores would place consumers in the appropriate category. Sill, at minimum 20% of consumers who be erroneously placed based off altering scoring systems.
Persis Yu, an attorney with the National Consumer Law Center said of the study, "It's really good to have this data. We always suspected these educational credit scores are not a good way to predict how (people) will be treated in a lending situation."
Free Credit Report Blog (http://freecreditreportblog.net/free-yearly-credit-report-vs-free-credit-score) is an online resource offering information about 3 credit scores. Readers can compare services that detail a consumer’s full credit profile with 3 credit reports and free credit reports from all 3 bureaus and learn how to get free 3 credit scores. http://free-creditreports.net has complete information about how to get credit reports. Visit Free-CreditReports.net today.
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