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Credit Score Survey Published by CFPB
In September 2012, the Financial Protection Bureau released a credit analysis survey entitled "Analysis of Differenerences between Consumer-and-Creditor Purchased Credit Scores". The present paper follows on from the CFPB paper of 19 July 2011 on "The Impact on Differences among Consumer-and-Creditor Purchased Credit Scores". Under Section 1078 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB was instructed to carry out a survey of credit checks selling to lenders compared to those selling to customers from national credit bureaux, and to assess whether any difference in those assessments would cause damage to customers.
The survey analysed the creditworthiness of three major credit bureaux - Trans-union, Equifax and Experian - and examined 200,000 credit records. Results of the trial were the following: 20% of customers would probably get a significantly different rating than the vendor. "Sensibly different" means that the consumer would probably get a different credit offer, better or better than they would have expected on the basis of the points they bought.
Disagreements in the assessment can lead to damage to users. In cases where customers believe that their score is higher than that of the lender, customers may spend considerable amounts of money and money seeking credit for which they are not eligible, or accepting credit deals that are on less favourable conditions than they could actually obtain.
It is unlikely that the consumer will know that the results he acquires are different from the results made available to them. CFPB therefore considers that customers cannot solely depend on the credit score they buy to comprehend how providers assess their creditworthiness.
It gives the following advice to the consumer to assess the creditworthiness they receive: Look around for loans. Although the marks bought or obtained by the consumer differ from those used by the lender, the lender may still be able to provide different credit conditions due to different types of risks or due to competition.
Moreover, shouldn't exclude the possibility that they are looking for cheaper credit just because they make credit rating judgments that they have made. They should verify the correctness of the credit report and contest any mistakes in the report. Imprecise information in a consumer's dossier can make the distinction between whether a user gets a credit approval or rejected.
With effect from 30 September 2012, CFPB will begin to supervise consumers' report centres. CFPB auditors will concentrate on verifying that consumers' reporters comply with federally mandated rules on consumption finance, in particular whether businesses are using and delivering accurate information, dealing correctly with consumers' litigation, making legal disclosure available and avoiding frauds and ID thieves.