Credit Scores Used by Consumers and Lenders Vary

On Sept 25, 2012, the Consumer Financial Protection Bureau released a study comparing credit scores sold to creditors and those sold to consumers. The Bureau found that 20% of consumers receive a score significantly different than the score send to the lender. The Bureau analyzed 200,000 credit files from Experian, Equifax and Trans Union. The report concludes that the credit score discrepancies harm consumers. Consumers, relying on the credit score they receive, may apply for credit and not get it or they may pay more for a loan that they should based on the score they received. There is no...

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Different Credit Scores Confuse Consumers

FICO is the company that developed the credit scoring system is being used by creditors to make decisions on extending credit. FICO may have had just one score per consumer at one time, but now FICO itself has many different scores. In fact, as reported in the NY Times, a writer with Creditsesame.com counts 49 different versions of your credit score under the FICO umbrella. Why so many? FICO uses credit data collected by the three major credit bureaus (Equifax, Experian and TransUnion) to create a single, three-digit score. FICO has three versions of the basic score, using data from...

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Quiz on Credit Scoring

The Consumer Federation of America and Vantage Score, which is a generic credit scoring system developed by the three national bureaus, have published a quiz that is designed to educate consumers on credit scoring. We recommend you “Take the Quiz.”

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Liz Weston’s Book on Credit Scores is Worth Reading

Liz Weston, who is MSNBC’s excellent consumer reporter, is the author of an excellent book on credit scores, Your Credit Score, Your Money & What’s at Stake: How to Improve the 3-Digit Number that Shapes Your Financial Future (available on Amazon). In the first chapter she explains that even a little ignorance about how to make your score higher can cost hundreds of thousands of dollars in higher interest payments over the course of a lifetime. She dispels myths such as the idea that closing accounts will help raise your score. According to Weston, closing accounts will never raise your...

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Persons Denied Credit to See Their Credit Scores

Under the Dodd-Frank law, consumers denied credit or good terms are entitled to see their credit scores. The new law provides that any borrower who is denied credit or offered a higher than usual interest rate is entitled to see his credit scores without having to ask. The purpose of the rule is to add transparency to the lending process and to help consumers shop for a better deal. Without the new law, consumers cannot even see their credit score for free except when they apply for a mortgage. There are some exceptions such as when a bank uses only...

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