Credit Scores and The Use of Them
The credit score you find at reporting agencies may not be the credit score your lender uses when you apply for credit.
However, your credit score could make or break a mortgage application or application for other credit.
A credit score weather better or worse, than the FICO score is not easy to predict.
The CFPB's new "Analysis of Differences between Consumer-and Creditor-Purchased Credit Scores" is a follow up to CFPB's report earlier this year, "The Impact of Differences Between Consumer- and Creditor-Purchased Credit Scores," which revealed the different sources and types of credit scores and potential for harm associated with their differences.
Part of the problem is the information is not universal in any one reporting agency.The stores, banks and other companies select who they report to.This will account for some of the differences.
Remember the scores are a numerical representation of your credit report. If your score is low the greater your risk for default on credit. While, the higher the score, the lower
The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Consumer Financial Protection Bureau (CFPB) to compare credit scores sold to creditors and those sold to consumers by nationwide credit reporting agencies to look at the differences.
CFPB analyzed credit scores from 200,000 credit files from each of the three major nationwide CRAs: TransUnion, Equifax, and Experian.
• Different scoring models would place consumers in the same credit-quality category 73 to 80 percent of the time.
That is, if a consumer had a good score from one scoring model, the consumer likely had a good score on another model.
• Different scoring models would place consumers in credit-quality categories that are off by one category 19 to 24 percent of the time.
• Different scoring models would place consumers in credit-quality categories that are off by two or more categories from 1 to 3 percent of the time.