The article that is on the front page alleges that two credit bureaus, Equifax and TransUnion, have been lying to consumers about their credit report, and that they have been providing consumers with a different credit report than they provide to lenders.
This is not correct and there is no evidence for this allegation.
The actual CFPB press release is here and contains the following allegations:
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TransUnion and Equifax sold credit scores under customers with the explicit statement that the scores were commonly used by lenders. The scores are actually not commonly used by lenders.
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TransUnion and Equifax deceived consumers into enrolling in subscription programs.
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Equifax also violated the Fair Credit Reporting Act by requiring consumers to watch ads for Equifax products before they could get their government mandated free credit report.
Wait, isn't #1 what The Atlantic Article was discussing?
No. The Atlantic article contains statements like this: "To do that, he or she needs to be able to see accurate credit reports that reflect the information that lenders see when they assess them. The actions of Equifax and Transunion prevented that." There is no evidence to support this statement.
Your credit report is completely separate from any credit score. Your credit report is data collected by the three credit bureaus that includes information about any loans, credit cards, late payments, accounts in collections, etc. that you have. Information is submitted by lenders to the agencies and they maintain these databases.
You have the right to get a copy of your credit report every 12 months from each of the three bureaus. This information is identical to what a lender will get when they look at your credit report. Again, despite what The Atlantic article says, there is no allegation from the CFPB that there is any problem with the credit reports themselves.
But isn't a credit score part of your credit report?
No. These are two separate things although many people purchase the two together.
But if TransUnion or Equifax is showing me a credit score and it's not the same one my bank uses, isn't that wrong or illegal?
No. There is no way for TransUnion or Equifax to know which credit model your bank is using. There is no one "accurate" or "correct" credit score. You have dozens and dozens of credit scores.
TransUnion and Equifax are not in trouble because they sold consumers a credit score that isn't commonly used. They are in trouble because they explicitly told consumers that the scores are commonly used. Like any company, they can still sell you whichever credit score they want as long as they are accurate in their advertising.
But 85% of credit decisions are based on my FICO score! Why aren't they required to give me my FICO score?
First, there is no requirement for anyone to give you your credit score for free, only your credit report.
But you have a lot of FICO scores, too. According to the FICO website here, the following FICO credit scores are the most commonly used:
FICO Score 8 (most widely used overall)
FICO Score 2
FICO Score 3
FICO Score 4
FICO Score 5
FICO Auto Score 2
FICO Auto Score 4
FICO Auto Score 5
FICO Auto Score 8
FICO Bankcard Score 2
FICO Bankcard Score 4
FICO Bankcard Score 5
FICO Bankcard Score 8
On top of that, there are other less widely used credit models, including Vantage, as well as proprietary credit scores. For example, a lot of utility companies use a completely different credit model called the TEC (Telecommunications, Energy & Cable).
Why so many credit scores?!
Credit scoring is a service that many companies offer to lenders, although Fair Isaac and Company (FICO) leads the industry by quite a bit. Each model is a little different, so the score is going to be different, the same way car insurance companies offer different rates based on their models.
Then there are score model updates. For example, FICO Score 9 came out recently. This new model has some changes from the very popular FICO Score 8, including the ability to consider payments to utility companies and rent, as well as a change to the way medical debt in collections is weighed. If you had medical debt in collections, your FICO 9 score will be higher than your FICO Score 8.
However, lenders can use any model they want to. They may choose to never use FICO 9 and keep using FICO 8. They may still be using FICO 2, as shown above.
So are you saying TransUnion and Equifax did nothing wrong?!
Of course that's not what I'm saying. They committed crimes and will be punished for it. I am simply saying that there is no reason to be concerned about your credit report.
Submitted January 05, 2017 at 11:28AM by IfWishezWereFishez http://ift.tt/2hVfck0
