Your Credit Score Could Be A Fake

Say you want to buy a house or a car and you need a loan to do it. You do what every personal finance site recommends and obtain a free copy of your credit report from

Then, urged on by the ads from TransUnion, Equifax, or Experian—the “big three” credit reporting firms that compile the reports—you opt for not only the free report but also shell out for what the companies promise is your actual three-digit credit score. A number! Now, you may think, I know what the auto lenders and banks making mortgages really think of me. I have a sense of what rates I qualify for and what type of car or home I can afford.

There’s just one problem: the score you paid for is likely not the same one potential lenders will use to assess you. In fact, it could be way off.

What many consumers don’t realize is that they have no single “credit score”—FICO alone has more than 49 different scoring models. And new research from the Consumer Financial Protection Bureau (CFPB) finds that for one in every five consumers, the score you’re buying from a credit reporting agency varies so greatly from what a lender would see—either better or worse—that the types of credit you’d qualify for would be meaningfully different.  

Worse yet, the CFPB notes, there’s no way to tell whether the score you just purchased is very similar to what lenders are looking at, varies somewhat, or is in another league altogether. You bought a credit score, but the truth is, you don’t know jack.

The consequences for consumers are extreme. Imagine if you qualified for prime credit, but the misleading credit score you just bought suggested that only a subprime loan was within reach. As a result, you might only apply for subprime mortgages when buying a home, and would pay hundreds or thousands of dollars in extra interest and fees. You might even face a higher probability of foreclosure due to the higher costs. Thank you, misleading credit score!

Luckily, there’s a simple solution. As I’ve pointed out before, the major credit reporting companies know quite a bit about our personal finances. Consumers should, in turn, have the right to know more about how this information is used. Specifically, they should get a look at the credit scores actually used by lenders to evaluate them. As we recommended in “Discrediting America,” Demos' overview of the credit reporting industry:

Federal legislation should be passed providing individuals with the right to obtain free annual disclosure of their actual credit scores (as they can currently access their credit reports) including specialty scores used to make decisions about insurance, healthcare and other services.

The CFPB’s powerful new research reinforces the need for this legislation. There’s no reason consumers should be paying for deceptive information when we should be getting accurate data for free.

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