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Credit Score Deception: Why Do Consumer Credit Scores Differ From Lender Scores?

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Did you know that the credit score you may purchase is different from the score that lenders use to determine the interest rate you pay for a loan?

The Consumer Financial Protection BureauCFPB) recently released a study comparing credit scores sold to lenders and those sold to consumers, and the study found that approximately "one out of five" consumers would likely receive an adverse different score than what the lenders receive from the credit bureaus, and notwithstanding the fact that companies on the internet are selling questionable credit scores for more than twenty dollars each. Different scores creates confusion for a consumer to determine best options to apply for credit.

"This study highlights the complexities consumers face in the credit scoring market," says CFPB Director Richard Cordray.

credit score deception

"When consumers buy a credit score, they should be aware that a lender may be using a very different score in making a credit decision."

For example, let's say John X purchased his credit score from TransUnion that shows a score of 733; that's very good. Yet on the same date, when John X order his same score from FICO(Fair Issac Corporation), the FICO score says the TransUnion score is 689. The difference in both scoring can boggle the mind considering the lower score of 689 may add more interest to a loan, although the FICO score is the most accurate.

According to credit and finance experts that the FICO score, out of several credit-basing model on the market; is the score most lenders rely on to make a decision to approve a loan.

"When a lender choose a scoring model to use, they"ll normally test several options against each other to determine which does the best job of identifying future "bads" from those consumers who make their payments on time," says John Ulzheimer, a credit expert for

"If you looked exclusively at credit bureau based risk-scoring systems, you'd find over five dozens options that lenders can choose from."

Ulzheimer further says in a Huffington Post article:

"Those models are referred to as "generic" scoring systems, which means they are sitting on a shelf and any lender in the United States can buy and use them for credit risk assessments."

Mandatory for lenders who deny a consumer a loan or do not give approval for the best interest rate on a credit product; lenders are already required to send the applicant a free copy of the credit score used in making such a decision. This rule, which went into effect in 2011, was an amendment to the broader financial regulatory system that applied to credit cards, auto loans and student loans. Mortgage lenders were already required to provide free scores to customers.

The credit industry is so filled with pitfalls and loopholes for lenders to capitalize on to make more money off a consumer with less than stellar credit by adding quadtripled high interest rates, U.S. legislation was introduced in March, which, if passed, would require the free annual disclosure of scores that lenders actually use; scores that's been kept secret for decades.

The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the CFPB to conduct the groundbreaking study to expose the various credit models that lenders use, and to further determine if the difference between scores actually harmed consumers. CFPB analyzed credit scores from 200,000 credit files from each of the following bureaus:(1) TransUnion (2) Equifax (3) Experian.

The Study Analysis Showed:

  1. One Out Of Five Consumers: likely receive a meanifully different score than what a creditor receive.
  2. When Consumers Purchase Their Score From a Credit Bureau, the score they receive may be meaningfuly different from the score that a lender would consult in making a decision. A meaningful difference, according to the CFPB exhaustive study means, "that the consumer would likely qualify for different offers--either better or worse-than they would expect to get based on the score they purchased."
  3. Score Discrepancies May Generate Consumer Harm: When discrepancies exist betwween the scores that consumers purchase and the scores used for decision -making by lenders in the marketplace, consumers may take action that does not benefit them. For instance, consumers who have reviewed their own score may expect a certain price from a lender may result in the consumer wasting time and effort applying for loans they are not qualified for, or, the consumer may accept offers that are worse.
  4. Consumers Unlikely To Know About Score Discrepancies: There is no way for consumers to know how the score they receive will compare to the score a creditor uses in making a lending decision. As such, consumers cannot exclusively rely on the credit score they receive to understand how lenders will view their creditworthiness.

The CFPB Recommend That Consumers Consider Options To Evaluate The Creditscore They Receive:

  1. Shop Around For Credit: Consumers benefit by shopping for credit. Regardless of the different scores lenders use, they may offer different loan terms because lenders operate different risk models or face different competitive pressures.
  2. Consumers Should Not Rule Out Seeking Lower Priced Credit: CFPB says this shouldn't be done due to assumptions a person may make about their credit score. While some consumers are reluctant to shop for credit out of fear that they will harm their credit score, that negative impact may be overblown. Inquiries generally do not result in a large reduction in a consumer's credit score.
  3. Check The Credit Report For Accuracy And Dispute Errors: Credit scores are calculated based on information in a consumer's credit file. Inaccurate information may be the difference between a consumer being approved or denied a loan. Prior to shopping for major credit items, the CFPB recommends that consumers review their credit files for inaccuracies. Each of the nationwide credit bureaus is required by law to provide credit reports for free to Consumers who request them once every 12 months.

According to a study by, that a lot of companies offering free scores to consumers only sell educational-based scores to give an idea of which scoring range a person's credit score falls in. Let's say a person purchase a FICO score, then they get the FICO score. But if a consumer request a free Transunion or Experian credit report the consumer will get a VantageScore.

Critics Warn Consumers From Using The Following Sites For Free Scores:


By using the aforementioned sites, according to Smartmoney, a consumer will get a "plus score," the kind of score typically not used by lenders.

Here at, is a credit score breakdown explaining how FICO scores are calculated with the numbers ranging from 350-850

CFPB announced last September that the nation's largest consumer reporting agancies updated their system to make it more accessible and easier for consumers to challenge disputes either by uploading information to the reporting agencies websites. Consumers can also submit disputes by mail or fax with supporting documents.

In a New York Times article published in March, National Consumer Law Center attorney Chi Chi Wu, praised the CFPB work to force credit bureaus to modify their rules and behavior towards American citizens who oftenly dispute errors on their credit reports to get better interest rates on loans.

"The Consumer Financial Protection Bureau was able to get the bureau to do something that years of advocacy and litigation had been unable to achieve."

"Step by step, they are trying to fix this terribly broken system and they are making decent progress."

The three major national credit bureaus are:

  1. Equifax; phone# 1-800-685-1111
  2. TransUnion; phone# 1-800-916-8800
  3. Experian; 1-888-397-3742

For more information on credit scores and how to use them visit:

Clarence Walker is a veteran business writer, news media journalist, as well as a writer of (SEO) search engine optimization material, and blending social media writing into articles for blogs and websites. As owner of Communication Specialists in Houston Texas, Walker provides a variety of writing services, such as: writing business plans and proposals, ghostwriting, copy writing business research and editorial services. Reach Clarence at Read more of his bio and stories by Clarence Walker.

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