The Consumer Financial Protection Bureau (known as the CFPB) hit Experian with a whopping $3 million penalty this week for lying and cheating consumers. Experian has been hawking the sale of credit scores that it told consumers were actually used by lenders. It turns out that these scores were NOT the ones used by the consumers’ lenders. Experian “PLUS Score” is not used by lenders. Experian attempted to punt with these scores as “educational” to the CFPB. What a laugh.
Credit scores are determined using a number of factors, which are assigned different levels of importance. These factors are calculated to produce a number (a credit score), which, in theory, represents a consumer’s creditworthiness. While many are familiar with the Fair Isaac Corporation’s FICO credit scoring system, no single scoring system is used by all lenders and there are roughly 50 different FICO scores available to lenders. More importantly, “educational scores,” like Experian’s PLUS Score, are almost never used by lenders.
Educational scores are supposedly intended to inform consumers, but often create a distorted view of how lenders will view their creditworthiness because loan decisions are based on entirely different credit scores. This can result in consumers believing their credit is worse than it truly is, discouraging them from applying for credit or accepting a higher interest rate. On the other hand, it can also lead to consumers being overconfident about their creditworthiness, causing them to waste time and money applying for credit they will not receive.
Although educational scores can give consumer a general sense of their credit worthiness, they should not be relied upon in making major credit decisions. If you’re thinking about applying for credit, obtain a copy of your credit report and check it for errors. An accurate credit report will result in an accurate credit score regardless of the credit scoring system used by the lender.
If you find errors on your credit report call (888) 293-2882 or email Attorney Gary Nitzkin at Credit Repair Lawyers of America for a free, no obligation consultation. He can also be reached at [email protected]. Credit Repair Lawyers of America specializes in fixing credit reporting errors at no charge to you. We can help maximize your credit score by working to remove inaccurate information on your credit report. The call is free and the advice is priceless.
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