Your Credit Score Could be Wrong

There’s a one in five chance that a credit score you see is “meaningfully different” than the score a lender scoping you out would see.

So says a new study from the Consumer Financial Protection Bureau. What that means is you would qualify for different credit offers (possibly better, possibly worse) than what you expected. Despite the fact you pay for a credit score precisely because you want to know what to expect.

Other findings obviously follow from that:

Score discrepancies may generate consumer harm: When discrepancies exist between the scores consumers purchase and the scores used for decision-making by lenders in the marketplace, consumers may take action that does not benefit them. For example, consumers who have reviewed their own score may expect a certain price from a lender may waste time and effort applying for loans they are not qualified for, or may accept offers that are worse than they could get.

Consumers unlikely to know about score discrepancies: There is no way for consumers to know how the score they receive will compare to the score a creditor uses in making a lending decision. As such, consumers cannot exclusively rely on the credit score they receive to understand how lenders will view their creditworthiness.

At the end of this month, the CFPB will begin supervising the credit reporting agencies. They’ll be watching to see that CRAs are “providing accurate information, handling consumer disputes, making disclosures available, and preventing fraud and identity theft.”