WASHINGTON – About 1 in 5 consumers are likely to receive credit scores that differ substantially from those used by lenders, according to a government study released Tuesday.
The study, by the Consumer Financial Protection Bureau, analyzed scores from 200,000 credit files from each of the three nationwide consumer reporting agencies: TransUnion, Equifax Inc. and Experian.
The discrepancies result from a variety of scoring models used by the agencies, which place consumers in different credit-quality categories 19 percent to 24 percent of the time, according to the study. About 1 percent to 3 percent of the time, the placement is off by two or more categories, the study found.
“This study highlights the complexities consumers face in the credit scoring market,” the consumer bureau’s director, Richard Cordray, said in a statement. “When consumers buy a credit score, they should be aware that a lender may be using a very different score in making a credit decision.”
Stuart K. Pratt, president and chief executive officer of the Consumer Data Industry Association, said his organization’s members fully cooperated with the study and provided all the data to government regulators free of charge.
But consumer advocates said the study casts serious doubt on the accuracy of credit scores.
“What this is telling me is that the consumer doesn’t have a number to rely on,” said Pamela Banks, senior policy counsel for Consumer’s Union, the advocacy arm of Consumer Reports.