The Consumer Financial Protection Bureau (CFPB) recently took action against Experian for deceiving consumers for a period of at least two years, 2012 to 2014. The CFPB discovered that the scores given to lenders were not the same scores given to consumers. The scores given to the public by Experian were “educational credit scores” or “PLUS” scores.
Experian misled consumers by telling them that these scores are what they market to lenders who use them to make credit-based decisions. However, lenders do not use PLUS scores. What they use is the FICO score which is typically different than the PLUS score. The purpose of these PLUS or educational scores is supposed to inform consumers of where they stand with their credit.
Credit matters and scores can be confusing enough to many consumers. It does not help when you discover that the score you have been given is not the actual score seen by the bank when you apply for an auto loan, or a new home. Even more confusing, the scores given to consumers can differ across the three major credit monitoring organizations; Experian, Equifax, and Transunion.
Since it is the score most often viewed by lenders, the FICO score is considered to be of the most importance. Lenders examine FICO scores to gauge the consumer’s ability to pay timely, as well the different types of credit loaned to them. They want to see a history of payments made or not made, and who else was willing to take a chance on loaning credit to you.
It is noted that the websites that offer free credit scores, are typically not giving you the actual FICO score. What the consumer receives is called a Vantage Score. Again, these scores are not typically seen by the lenders. According to James Wehmann of FICO, there is no such thing as any one single score for any one consumer.
He explains it this way, “Because multiple versions of the FICO Score exist and are used by thousands of lenders, no single FICO Score represents a consumer’s “credit score”. It doesn’t matter whether a consumer receives a FICO Score or VantageScore, because they all work similarly: if you rank high on one score, you’ll rank high on another score and all these scores move up and down together.”
This does not excuse the actions of Experian, however, who neither denied or admitted to their role of deceiving consumers about their credit scores. It is important to note that they did pay the fine rather than contest the accusations against them. Equifax and Transunion were also accused of being deceptive with consumers by getting them to sign up for free services then later automatically switching those services to paid.
It was also found that the scores they were selling to consumers were different from the scores shown to lenders. Transunion and Equifax together paid a total of $23.1 Million this past January. Consumers should take care in order to avoid these kinds of credit issues happening to them. Scammers exist everywhere, even in high places.
Did you have a bad experience with Experian? Let’s discuss here or on Twitter @lcarterwriter.