Getting the Right Credit Score Isn’t Easy

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We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Wednesday, April 17th, 2013

Consumers Union’s “Know Your Score” campaign is working to pass legislation in Congress that gives consumers free access each year to their credit score. As part of our campaign, we’ve been collecting stories from consumers about their credit score experiences. The response has been overwhelming. We’ve learned that many consumers are frustrated to find that their lender used a different credit score than what they themselves had purchased from the credit reporting agencies (CRAs).

Kimberly of Dearborn Heights, MI, had to pay a higher interest rate on her car loan than she had budgeted for, because her lender used a score that she had never before seen. Kimberly writes:

“In 2011 I purchased a 2012 Ford Focus brand new. I felt very   prepared walking into the dealership knowing what my credit score was and expecting to get the finance rates and rebates offered for having that score. As it turned out, the scores I acquired from all 3 of the biggest credit reporting agencies were wrong. I had an average of 702 at the time but the finance manager gave me a completely different one. This affected the interest I had to pay and removed some of the finance bonuses I could have been eligible for. I had to make the purchase as my current vehicle was 13 years old! Needless to say it was a shocker, threw my budget to hell and left me frustrated and angry as a consumer.”

Many of the scores sold to consumers by the major CRAs — Experian, Equifax, and TransUnion — are not offered for sale to lenders, or are infrequently used by them. Even Experian admits that the “Experian Credit Score” is not sold to lenders, while Equifax concedes that there’s only a small chance that your lender will look at their credit score when making a decision. According to a 2011 report by the Consumer Financial Protection Bureau, about 90% of lenders used FICO scores in 2010 to make credit-related decisions.

FICO sells consumers scores based on either their Equifax or TransUnion credit report for about $20 each. Equifax sells a FICO score as well. However, according to Consumers Reports, a lender may use an older or newer version of the FICO score than the one that you purchased.

Moreover, many lenders will use any number of other scores to judge your creditworthiness. For example, FICO sells lenders scores that are carefully calibrated for different types of loans, such as auto and credit card loans. Currently, consumers are not able to purchase or view these scores.

We think consumers should get free annual access to the score that will be used by lenders before they begin shopping for cars or other big-ticket items. In the meantime, Consumer Reports recommends that you ask your lender to see the score they will use before you take out a loan. It may be the best option that you can take until Congress reforms the credit-reporting process.

Take action now! Tell your Senators to pass the Fair Access to Credit Scores Bill. We also need to hear from people like you, who have had bad experiences in dealing with the CRAs. Please tell us your story!

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