Remember those catchy TV commercials advertising free credit scores?
Haven’t seen them in a while have you?
Well, that’s because they were deceptive and the credit scores were completely useless and not actually free.
Most lenders, whether they are auto, home, credit card, etc… use FICO scores to determine consumer creditworthiness but, those scores belong to the Fair Isaac Company and the credit bureaus have to buy them from FICO in order to sell them back to the consumers.
This wasn’t very profitable so the credit bureaus found a way around this by creating their own credit scores. The Vantage Score was born, a score the credit bureaus could provide to consumers without having to pay anything to FICO.
Unfortunately, because no lenders use Vantage Scores, consumers are tricked into buying scores which are completely useless. But, it doesn’t end there, once a consumer gets the useless credit score they are automatically enrolled in credit monitoring ranging from $16 to $30 per month.
What You Need To Know
Although there are plenty of places that advertise free credit scores like CreditKarma.com, Credit.com, CreditSesame, Quizzle.com, etc… most of these scores are VantageScores and are NOT used by lenders. There are credit card companies like Discover, Barclays Bank, and Capital One which offer a free FICO score, you can also purchase your FICO scores directly from the Fair Isaac Company via their website www.myfico.com.
Back To The Credit Bureaus
The CFPB (Consumer Financial Protection Bureau) found that 2 credit bureaus deceptively advertised that the scores which they provided were the same ones that lenders used to determine creditworthiness.
TransUnion and Equifax were ordered to pay a $5.5 million fine and give $17.6 million in refunds.
In a statement from Richard Cordray, director of the CFPB, “Credit scores are central to a consumer’s financial life, and people deserve honest and accurate information about them.”
Neither TransUnion nor Equifax admitted any wrongdoing and stated that they had complied with the law and were committed to better educating consumers about their credit.
All credit scores are NOT created equal, understand that the type of credit score you’re looking at is just as important as the score itself.