What is the Consumer Financial Protection Bureau (CFPB) asking of credit card companies?
Why are credit card companies responsible for providing consumers with copies of their credit scores monthly? It is hard enough as it is for consumers to get explanations and information from their credit card companies. It seems the three major credit bureaus who compile all the data should provide credit scores to the general public instead of the credit card companies. The bureaus have already created scores and can provide them to consumers much more easily. Right now there are some credit card companies offering credit scores but this could wind up confusing consumers and giving them a false sense of reality. If you read the fine print on the Discover Card offering credit scores it is clear that only the Trans Union Fico score is provided.
Here is the fine print taken from the Discover site:
“Your FICO® Credit Score is based on data from TransUnion and may be different from other credit scores. FICO® Credit Scores are delivered only to Primary cardmembers who get a monthly statement and have an available score. Discover and other lenders may use different inputs like a FICO® Credit Score, other credit scores and more information in credit decisions. This benefit may change or end in the future. FICO is a registered trademark of the Fair Isaac Corporation in the United States and other countries.”
Since banks take the middle score of ALL THREE credit bureau FICO scores (Trans Union, Equifax, and Experian) only having one score isn’t a true and accurate reflection of what a lender would see when evaluating credit. Many consumers have different information on each credit bureau report. This will cause the three scores to vary. If a collection agency updated a bad debt it would place the derogatory on only two of the three credit bureaus.
For example: If a consumer had a 745 Trans Union Fico score, a 743 Equifax, and a 746 Experian and a collection was posted to the Experian and Equifax credit reports the credit scores with those two bureaus may drop down to around a 650. The middle score would then become a 650. Most collection agencies update a collection to two of the three bureaus since it is less costly and delivers the same damage to scores. They know the impact to the middle score will change the risk level of the borrower. This results in card holders getting a false sense of what their score is because many will not purchase credit monitoring products or research further what services are best for analyzing credit scores. Most likely they will figure out too late that their score might be entirely different then what was presented by the credit card company, such as before they need financing on a major investment like a real estate purchase or a refinance.