Government inquiry finds one can have dozens of credit scores

Thursday, August 18th, 2011 By

Numbered Lanes

Though there are three different credit agencies, there are dozens of different credit scores. Image: Flickr / teosaurio / CC-BY-SA

A credit score is one of the most basic financial-health meters. A recent inquiry by the Consumer Financial Protection Bureau, however, has found that there is no such thing as a single credit score. The score that consumers receive when requesting their report may not, in fact, be the same score potential creditors see.

Differences in credit scores

There is no such thing as a single credit score. At a minimum, there are three different scores from three different credit rating agencies. The difference in these three scores alone can be as much as 30 percent. Now, an investigation by the Consumer Financial Protection Bureau discovered that these three scores and their differences barely scratch the surface. There are industry-specific credit scores, adjusted credit scores and educational scores.

Breaking down the scores

The initial report from the CFPB found several different types of scores that the credit rating agencies provide for each individual. The educational score is the score most of us see when we request a copy of a credit report. An industry score, on the other hand, is a score based on specific information about the consumer’s behavior in certain industries – car loans and the like. There are also custom scores that some businesses or industries formulate with a credit reporting agency.

CFPB digging deeper

Though the CFPB has discovered that there is a discrepancy between credit scores, the study did not identify how big those discrepancies are. In order to further research this, each of the three credit reporting agencies is providing non-personally identifiable data on 200,000 individual consumers. That data will be crunched, and the CFPB will release the data as soon as it is available.

Protecting your credit

Though there are significant differences in credit scores, the basics of keeping your scores protected are the same. Pay your bills on time, make good use of the credit you do have available, and don’t over-extend yourself. If you are denied credit because of your score, you have every right to request a copy of your report, and while it may not be the same, it will give you an indication of the trouble spots in your credit that you may need to work on correcting or fixing.

Sources

MSN Money
Treasury.gov
Bankrate

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