Experian fined $3 million for lying about how lenders use credit scores

by Ryan Smith24 Mar 2017

Credit reporting agency Experian has been slapped with a $3 million fine for lying to consumers about how its credit scores are used.

The Consumer Financial Protection Bureau imposed the fine on Experian. According to the CFPB, the credit reporting agency claimed that the scores it marketed to consumers were used by lenders to make credit decisions, when in reality lenders didn’t use those scores.

“Experian deceived consumers over how the credit scores it marketed and sold were used by lenders,” CDPB Director Richard Cordray said. “Consumers deserve and should expect honest and accurate information about their credit scores, which are central to their financial lives.”

In addition to the credit scores that are actually used by lenders to make credit decisions, several companies have developed “educational credit scores” intended to give consumers an idea of their credit. But lenders rarely, if ever, use those scores in making a loan decision. Experian developed a proprietary scoring model – called the “PLUS Score” – that it marketed to consumers. The PLUS Score was an “educational” score, not used by lenders, according to the CFPB. But from at least 2012 through 2014, Experian falsely represented that the scores it marketed to consumers were the same ones lenders used to make credit decisions, the CFPB alleged. In reality, lenders never saw the scores Experian sold to consumers – and in some instances, there were significant differences between consumers’ PLUS Scores and the scores lenders actually used.

In addition to paying a $3 million penalty, Experian must truthfully represent the scores it sells and develop an effective compliance system to ensure its advertising about credit scores complies with federal law.


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CFPB slaps another credit reporting agency with fine

 

 

COMMENTS

  • by someone in the biz | 3/24/2017 12:26:09 PM

    Hopefully this will put a stop to providing false information to folks who rely on professionals for information in order to make important decisions. Generally buying a house is the largest investment a person will make in their lifetime. Experian is lucky it was only $3 million. I wonder how many people they led astray.

  • by Compliance Guy | 3/28/2017 6:06:50 PM

    Bigger Questions: Why the difference in the scores anyway? Why can't the consumer get the exact scores that lenders use? Credit Karma and many other credit score sellers are misleading consumers with scores that no lender ever sees. Why not allow the consumer to see score after it has been adjusted through lending algorithms? Would that cause less headache for consumers?

  • by Kevin | 4/19/2017 4:34:07 PM

    it's just greed. By creating a differentiation in the two scoring models ant allowing consumers access to the lending scores allows the credit bureaus to "double dip" I.E. sell reports to both lenders and consumer's separately. if their was one "universal" scoring model provided to everyone equally this would equate to less business for the bureaus. I hope these credit provider's get reigned in. They are becoming borderline scam operations.

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