different credit score than the one a creditor uses to price a loan, according
to the Consumer Financial Protection Bureau (CFPB). The discrepancy has the
agency concerned.
Lenders use credit scores to help determine the
interest rate they’ll charge customers – higher credit scores often receive the
best rates.
“Many consumers incorrectly believe that the scores they
purchase are the same ones used by lenders,” according to a CFPB report. As
such, a “substantial minority” of consumers are at risk of overpaying for credit
or applying for loans they have little chance of receiving.
Even the
slightest variation in credit scores can make a big difference, and the
discrepancies have the potential to hamper a person’s chances for qualifying for
certain kinds of home loans, according to the CFPB.
The CFPB sites FICO
scores, which are widely used by lenders, as an example. FICO has different
credit scoring models for lenders, and it can be different than what consumers
see. VantageScore also has different types of credit scores, CFPB
says.
CFPB is evaluating the accuracy of credit reporting firms’ service
to consumers. It encourages consumers not to focus on a score’s number when they
review credit reports, but to check the accuracy of the payment history firms
use to calculate scores. Consumers correct errors on the payment histories
within reports because it can help improve their scores.
Source:
“Regulator Sees Flaws in Credit-Score Information,” The Wall Street Journa