Credit Bureau Fined $ 3 Million for Confusing You About Your Credit Score
The entire lending industry is so complex and often contrary to good financial habits . It’s frustrating, and even more frustrating, the fact that you don’t have just one credit rating . You have quite a few, and the latest Experian news shows that little is known about it.
You’ve probably heard of Experian. It is one of the three main credit bureaus, the other two being TransUnion and Equifax. They track and evaluate consumer credit through reports and ratings. This week, the Consumer Financial Protection Bureau (CFPB) fined Experian $ 3 million for misunderstanding about the ratings. MarketWatch reports :
In its complaint against Experian, the CFPB said that in some cases there were significant differences between the credit ratings the company provided to consumers and the credit ratings that were actually used by lenders. “As a result, Experian’s credit ratings in these cases provide an inaccurate picture of how lenders assess consumer creditworthiness,” the agency said in a statement.
Experian is not alone, however. Earlier this year, Transunion and Equifax paid similar fines. The problem is that, according to the CFPB, these bureaus have led clients to believe that their own ratings are the same as those used by lenders to make lending decisions.
In fact, you have several different ratings , and some of them even differ depending on what type of loan you are applying for (besides, the loan is not only used for the loan. Landlords and account providers also check your credit). For example, there are estimates specific to mortgage lending. However, the overall FICO score is the oldest model, and FICO states that their model is used in 90% of lending decisions. Your overall credit ratings should be roughly the same, but there is no guarantee. Your best bet is probably to focus instead on your report , which gives you a much more detailed view of your credit, from the specific cards you have opened, to the accounts that have been converted to fees, to the balances you owe.