Experian is facing a significant fine of $3 million from the Consumer Financial Protection Bureau (CFPB). An investigation showed that between the years of 2012 and 2014, they were providing false information to consumers about certain credit score services.

Major Credit Bureaus

Experian is one of the “big three” major credit bureaus (along with Equifax and TransUnion) that consumers trust for credit score reporting. Experian offers what they called the “PLUS Score,” which is a user-friendly credit score system to measure credit worthiness on a score range of 330-830. During the violation years in question, the CFPB found that Experian “falsely represented the credit scores it marketed and provided to consumers were the same scores lenders use to make credit decisions.”

TransUnion and Equifax are coming off their own fines for deceptive consumer advertising. TransUnion had to pay $17.6 million in restitution while Equifax received a penalty of $5.5 million for these violations.

Ultimately, the CFPB has found that all three major credit bureaus violated the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed in 2010 President Obama.

Understanding FICO Scores

The truth is, most lenders (roughly 90% of them nationwide) use FICO scores when it comes to determining credit decisions. FICO provides more than 50 different types of scores. Mortgage lenders will acquire a FICO Mortgage Score before any home loan is approved.

As a consumer—more specifically a home buyer or someone looking to refinance—it’s important that you understand how credit scores work and what scores are most important to your lender. Different bureaus may report different information, and “educational scores” are usually inflated or inaccurate. Don’t pay extra for something that really has no value to you.

Make the Right Credit Decisions

Whether you are buying a car or opening a credit card account, speak with your lender or financial representative about credit ratings. If you are looking to buy a home or refinance your current mortgage loan, contact Transparent Mortgage today. We’ll be happy to walk you through the process, explain the credit scores that we use and ensure you make all the right decisions. Call us today at (619) 929-0199.

Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.