Oversight agency finds discrepancy in some ratings
San Francisco, CA -- (SBWIRE) -- 10/04/2012 -- Lenders sometimes get credit scores different from those offered to consumers, an oversight agency has found, and that might be hurting borrowers.
Many credit models can be used to evaluate a consumer’s credit history, and a study by the Consumer Financial Protection Bureau found that scores used by lenders are not always the same as those sold to consumers, Reuters reported. The agency said that in 19% to 24% of cases it analyzed, scoring models produced “significantly different” ratings.
That means consumers might believe they qualify for loans that they cannot afford, or they might accept terms that are not the best they could get.
“When consumers buy a credit score,” said Richard Cordray, director of the bureau, “they should be aware that a lender may be using a very different score in making a credit decision.”
Banks, home loan lenders and other businesses use credit scores to help decide what interest rate they will charge and whether they will offer a particular loan.
The consumer protection bureau looked at 200,000 credit files to see how scores obtained by consumers and businesses might differ, said the bureau, which was set up by the Dodd-Frank law of 2010 and does monitoring of credit cards and mortgages.
About 30 of the biggest credit reporting services will be under closer supervision.
Most consumers probably do not know that their credit report might not be the one a lender sees, the bureau said, adding that it is important to shop around for the best credit.
Equifax, Experian and TransUnion are three of the best-known credit-reporting companies.
FreeCreditReportBlog.net (http://freecreditreportblog.net/free-yearly-credit-report-vs-free-credit-score) is an online resource offering information about free 3 credit reports. 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.
Copyright © 2005-2013 - SBWire, The Small Business Newswire - All Rights Reserved - Important Disclaimer
Contact Us: 888-4-SBWIRE (US) - 920-593-5640 (International)