Linkage: Your credit score may be lower than you think

One of the big stories last week was about how credit bureaus advertise credit scoring models that lenders don’t actually use to make loans. Here’s an excerpt from the Inside Mortgage Finance link below that summarizes the issue that’s been a hot topic for years–people come to a lender and say their credit score is a certain level, but when the lender runs credit, the score is lower. The reason is because bureaus use different models, and the consumer-only scores are often higher than the scores lenders use.

TransUnion made inaccurate claims to consumers about its VantageScore credit score, according to a consent order issued by the Consumer Financial Protection Bureau on Tuesday. The CFPB said that while VantageScore has been offered to lenders, “the vast majority of credit decisions made by lenders are not based on VantageScore credit scores.”

According to the consent order, some ads from TransUnion led consumers to believe that the VantageScore-related product they were purchasing was the same score used by lenders and others to determine creditworthiness. In some instances, the ads contained disclosures, but the CFPB said the ads failed to disclose that VantageScore isn’t typically used by lenders.

The CFPB said there’s no way for either TransUnion or consumers to know which credit score model a lender may use when making a credit decision related to that consumer. TransUnion said the consent order focused on “common industry practices” relating to the advertising, marketing and sale of consumer reports, credit scores or credit monitoring products to consumers.