Credit Regulation

Due to the Consumer Financial Protection Bureau (CFPB) more credit-card companies are making credit scores available, but is this a good thing?

Due to a call for more regulation on credit reports the CFPB has strongly encouraged credit-card companies to provide customers with their scores. In one of my last posts, I discussed how credit bureaus should be providing credit scores to the public instead of credit card companies because they will be more accurate and easier to provide. However, it seems to have gone in the opposite direction.

An increasing number of lenders are now offering free scores to their consumers. A recent example is Capital One Financial, who announced they will make credit scores available online. In February, Discover started offering scores both online and on monthly statements. Also, Barclays has rolled out a plan to make scores available to all its customers.

At first, this seems like a good change that will give people more power over their credit score. However, the scores offered by these companies can be inaccurate and give people a false sense of their credit standing. For example, Capitol One offers its customers only the TransUnion FICO score, while banks take the middle score from all three credit bureaus. A borrower could have a negative updated on the other two bureaus and not TransUnion, and then think their score is much higher than it actually appears to lenders. It’s even worse because banks will also take in account other factors like your payment history.

Instead, I recommend ordering your three credit reports and FICO scores from myfico to get a complete view of your credit. This will show an accurate view of your middle score and also your payment history, loans, and any missed negatives that could be affecting you. It’s also always a good idea to speak with a reputable credit specialist to get an accurate view of your credit before applying for a loan.