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.
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.
A credit score predicts how likely you are to pay back a loan on time. Your credit score is a three-digit number that is based on information from your credit report.
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.
We also have answers to many credit reporting questions in Ask CFPB.
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 scores
There is no “one” credit score.
There 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.
Credit reporting companies can gather information from many sources including:
of lenders across the country
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 or call 877-322-8228.
Learn more about how to get a free copy of your credit report.
The Fair Credit Reporting Act (FCRA) is a federal law that provides directions and limits on how credit reporting companies disclose credit report information.
- By requesting the reports at the same time, you can determine
whether any of your files have errors.
- By requesting the reports separately, you can monitor your credit
files more frequently throughout the year.
When you get your report, look for:
in your name, phone number, or address.
credit cards, or other accounts that are not yours.
saying you paid late when you paid on time.
you closed that are listed as open.
same item showing up more than once (like an unpaid debt)
Tip 3: How to get and keep good credit scores:
- Pay all your bills on time. Setting up automatic payments, or
electronic reminders, can help you keep on top of your payments.
- Don’t use too much of the credit that
is available to you. Your credit limit
is the amount of total credit you have. Credit scoring models look at how close
you are to being “maxed out,” or owing as much as your credit limit, so try to
keep your balances low in proportion to your overall credit limit.
- Be careful closing accounts. Scoring models look at your available
credit. If you close some credit card accounts and put most or all of your
credit card balances onto one card, it may hurt your credit score if you are
using a high percentage of your total credit limit. Frequently opening accounts
and transferring balances can hurt your score too.
- A long credit history will help your
score. Credit scores are
based on experience over time. Your score will improve the longer you have
credit, open different types of accounts, and pay back what you owe on time.
- Only apply for credit you need. Credit scores look at your recent
credit activity as an indicator of your need for credit. If you apply for a lot
of credit over a short period of time, it may appear that your economic
circumstances have changed for the worse.
Tip 4: Fix any mistakes you find in your report
If you find something wrong in your credit report, you may contact both the credit reporting company and the entity that provided the information. Explain what you think is wrong and why. Include copies of documents that support your dispute. Your credit reports will come with instructions on how to dispute mistakes.