Consumers have the right to request (for a fee) their credit score from the three nationwide consumer reporting agencies, Equifax, Experian and Trans Union.  Is the credit score consumers receives the same score provided to lenders?  No, according to a recent Consumer Financial Protection Bureau (CFPB) report.

In its July 20, 2011 report, the CFPB analyzed the differences between credit scores sold to consumers and the credit scores actually used by creditors when making lending decisions.   The CFPB was required by the Dodd-Frank Act to conduct the study.  Elizabeth Warren, Special Advisor to the Secretary of the Treasury on the CFPB, said “One way consumers have tried to empower themselves is by knowing their credit scores. We are assessing whether purchasing a credit score provides a consumer with the information he or she needs.”

The CFPB report examines why different scoring models may produce different scores for the same consumer, how different scoring models are used by creditors in the marketplace, what credit scores are available to consumers for purchase, and ways that differences between the scores provided to creditors and those provided to consumers may disadvantage consumers.

Consumer reporting agencies, such as Equifax, Experian and Trans Union,  compile and maintain files on consumers that are used to produce credit reports. Credit scores are numerical summaries of the comparative credit risks of default; they are calculated based on information contained in credit files and credit reports. These scores are important because they are used to make credit-granting decisions, to identify prospects for credit offers and solicitations, to make decisions about raising or lowering credit limits on credit cards, and to set terms for mortgages or other loans, among other uses.

The credit scores available for purchase by consumers may vary from the score used by a lender for a variety of reasons, including:

  • Use of different scoring models;
  • Lenders and consumers may not use the same credit reporting agency;
  • Data in the consumer’s credit reports change between the time the consumer purchases a score and the time the lender obtains the score;
  • A consumer and a lender could possibly access different reports from the CRA, if they were to use different identifying information about the consumer.

The report found most consumers are unaware that their credit score represents the risk of not repaying a loan and that the credit scores purchased by consumers may not use the same credit scoring models that are most widely used by lenders.

Consumers may purchase a credit score and believe it is their actual score when it is not.  The most significant adverse impact on a consumer from score differences would likely occur if the credit scores the consumer buys give a substantially different impression of his or her credit risk than credit scores that a lender would use.