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Are Free Credit Scores a Waste of Your Time? – Credit Law Center

Are free credit scores a waste of your time?

Last week, 2 of the big 3 credit bureaus were ordered to pay $23 million for deceiving customers. The CFPB accused the credit bureaus of misleading marketing of false information of credit scores and products being sold to the public. According to the regulator, “TransUnion and Equifax falsely represented that the credit scores they marketed and provided to consumers were the same scores lenders typically use to make credit decisions. When in reality the lenders do not use the credit scores provided at all. So you can imagine the frustration of going to get a loan, when your score is different from the one the lender is using.

In many cases, the Vantage Score was the score being provided to the consumers. Which the CFPB clearly states that Vantage Scores are not typically used for credit decisions. Does that mean your Vantage score is useless? Well the short answer is no. You just simply need to know what to do with it. It is designed to be used as a tool or guide. Add that with a detailed credit report with credit history, then it allows you to know if the information on the report is accurate or not. If you have collection, the chances of that debt being reported correctly is pretty low. A trained credit analyst can walk you through the probability of a deletion, or inaccurate information that is hurting your credit score.

There are 2 types of credit scores, there are FICO and Vantage scores. FICO scores are what most lenders use to base a loan approval. However there are several different versions of FICO score algorithms out there and it’s almost impossible to know which lender is using what without doing your homework.

If you visit the FICO website, you will see the claim that “90% of lenders use FICO scores when making lending decisions.” It is important to read this carefully. Just because a FICO score is being used in a lending decision does not mean it is being used exclusively.

The only product where you explicitly know the credit score being used is a Fannie Mae or Freddie Mac mortgage. In these cases, the credit score for a mortgage is explicitly disclosed in Seller’s Guide online.


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