I’ve been warning people not to buy their credit scores from the credit bureaus, because those scores are not their real scores; that is, they are not the scores used by mortgage lenders. Now the Consumer Finance Protection Bureau (CFPB) has levied a big fine against Equifax and TransUnion for deceiving consumers by selling those scores.
People purchased them in good faith, wanting to know if they qualified to buy a home. But the scores they got were calculated with a different, more generous algorithm, often 20 to 80 points higher than their actual mortgage scores.
Their little scam will cost those two credit bureaus more than $17,600,000. Of that, approximately $13.9 million is to go as restitution to affected consumers. The companies are required to send notification letters to the folks who were taken advantage of. I hope people don’t mistake the letters for junk mail and toss them in the recycle bin.
Going forward, Equifax and TransUnion must make it clear that the scores are good for entertainment purposes only–just kidding. Those scores are good for qualifying for a little plastic credit card, which is not that hard to do. Personally, I would not pay money for that when there are sites that offer free scores for people who want to get an “approximate score.” (Beware that the free scores are not offered as a charity. Those sites will then try their darndest to get you to buy a service or product from them, and they will send you solicitation emails until you get so sick of them that you unsubscribe.)
The third major credit bureau, Experian, was not a part of this action.
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