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Experian to pay $3 million for deceiving consumers about credit scores

Experian is being fined $3 million for deceiving consumers about the use of credit scores it sold to consumers, the Consumer Financial Protection Bureau Thursday.

Experian claimed its credit scores were used by lenders to make credit decisions, but lenders don’t use Experian’s scores in the process. The bureau ordered Experian to tell the truth about how its credit scores are used in addition to paying the fine.

“Experian deceived consumers over how the credit scores it marketed and sold were used by lenders,” said Richard Cordray, director of the bureau. “Consumers deserve and should expect honest and accurate information about their credit scores, which are central to their financial lives.”

Experian is one of the nation’s three largest credit-reporting agencies. Credit scores are among the financial products it sells to consumers. Many lenders consider credit scores when deciding whether to approve a loan.

There is no one credit score or credit-scoring model that is used by every lender. In addition to the credit scores actually used by lenders, several companies have developed “educational credit scores,” which are used to provide inform to consumers.

Experian developed its own credit-scoring model, referred to as the “PLUS Score,” which it applied to information in consumer credit files to generate a credit score it offered for sale to consumers. The PLUS Score is an educational credit score.

From 2012 through 2014, Experian violated federal consumer laws by deceiving consumers about the use of the credit scores it sold.

In some cases, there were large differences between the Experian PLUS Scores and the credit scores lenders actually use. Experian’s credit scores in these cases gave an inaccurate picture of how lenders assessed consumer creditworthiness.

Experian also violated credit reporting laws, which require a credit reporting company to provide a free credit report every year and to offer a place – AnnualCreditReport.com – where consumers can get their report. Until March 2014, consumers seeking a report through Experian had to view Experian advertisements before they got to the report.

In addition to paying a fine and being required to tell the truth, Experian needs to develop and carry out a plan to make sure its advertising of credit scores and Internet webpages that consumers access through AnnualCreditReport.com comply with federal consumer laws and the terms of the bureau’s order.

Copyright 2017, Rita R. Robison, Consumer Specialist

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