What you need to know: Understanding why offers for “your” credit score are not all the same | Consumer Financial Protection Bureau

Today, TransUnion and Equifax have agreed to change practices that the Bureau found misled consumers about the value of the credit scores they marketed and sold. In their advertising, TransUnion and Equifax misrepresented that the credit scores they marketed and provided to consumers were the same scores that lenders typically use to make credit decisions when that is not accurate. The companies have also agreed to return more than $17.6 million to consumers and pay penalties totaling $5.5 million.  

Read more about the settlements in our press release[1].

Credit scores, and the information in your credit reports, can provide important information. When considering an offer for a credit score, keep in mind that the credit score being provided or sold may not be the same score that is used by lenders and insurers in making credit decisions. Here is some information to help you make sense of credit score offers.

You do not have just “one” credit score – there are many credit scores available to you as a consumer as well as to lenders and insurers, and the credit score you obtain may be different than the ones that businesses use to make credit decisions. A credit score may vary from lender to lender, and depending on which consumer reporting company compiled the credit history used to generate the score. 

Even when you obtain a credit score from the same reporting company that a lender used, the score you get as a consumer may be different.

We want you to understand what
information will be most useful to you when learning about your credit report
and scores. Here are some key tips you should keep in mind.

Tip 1: Understand the differences in your credit

is no “one” credit score.

are many credit-scoring formulas available to you as a consumer as well as to
lenders. The score you receive from any source will depend on the data used to
calculate it, and the score may be different depending on the scoring formula,
the source of your credit history, and even the day when it was calculated.

Credit reporting companies, also
known as credit bureaus or consumer reporting agencies, are companies that
compile and sell credit reports.

reporting companies can gather information from many sources including:

  • Thousands
    of lenders across the country
  • Public
    records, such as bankruptcies, liens, and other judgments
  • Collections
    agencies, which provide information on delinquent accounts

Because credit reporting companies
calculate scores in a number of ways, and because they may report your
financial history at different times, your credit scores may change slightly
each month.

Tip 2:
Monitor your credit report for accuracy

Mistakes in your credit
reports could hurt your credit history and credit score, so check them
regularly. If you monitor your credit report,
you can keep track of the items affecting your credit scores and make sure your
credit report is accurate. You can get one free credit
report from each of the big three credit reporting companies every 12 months.
Go to annualcreditreport.com [2] or call 877-322-8228.

Learn more about how to get a free copy of your credit report[3].

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