My Credit Score, is it real or a “Fraud Score”?

“Fraudulent” Advertising by Experian

Out in sunny California, consumer David Waring is suing Experian for fraud claiming that he thought the credit score provided through FreeCreditScore.com was his FICO score, not Experian’s generic-brand PLUS score.

While the FICO score is the credit industry standard, the big 3 credit bureaus have been selling their own brand of credit scores for years. Transunion has VantageScore, Equifax has the Equifax Credit Score, and Experian has the PLUS score. These off-brand credit scores are calculated using an equation similar to the one Fair Isaac Corporation developed for the FICO score, but they are not identical to the FICO score.

To understand some of the history surrounding FICO scores and these off-brand credit scores, we have to go back to October 2006. Fair Isaac Corporation sued the 3 big credit bureaus Transunion, Equifax, and Experian over the new VantageScore. At the time, Fair Isaac Corporation was the only big dog when it came to credit scores. They bought consumer information from the 3 big credit bureaus, plugged the information into their equation, and sold the credit reports and scores to the customer. With VantageScore, the credit bureaus could cut Fair Isaac Corporation out of the equation by developing their own credit score formula and selling their credit scores directly to the consumer.

Fair Isaac Corporation lost in court, and the 3 big credit bureaus were allowed to continue selling their own credit scores. Some consumers, however, are unaware that not all credit scores are the same. To make matters worse, some of the websites like FreeCreditScore.com or other websites selling generic-brand credit scores confuse consumers by hiding the fact that these are “VantageScores” or “PLUS scores” in the fine print, and unless consumers know where to look, they can end up buying their credit score, not knowing this credit score is not their FICO score.

Now, Experian’s PLUS Score and other generic-brand credit scores are not necessarily bad. In fact, they can be very helpful in assessing your credit health, and typically the FICO score is not that different from these other credit scores. The problem here is that lenders will not be pulling PLUS scores or VantageScores. Lenders still depend on FICO scores to assess a consumer’s risk, and here is where David Waring felt misled. He thought that FreeCreditScore.com gave him the credit score that lenders would look at when he applies for a credit card or a loan. If he had wanted his FICO score, he should have gone to http://www.myfico.com which is the only credit score website where consumers can purchase their FICO score.

There are two things that I hope come out of this lawsuit. First, I hope that Experian is more upfront in their advertising that their scores are VantageScores, not FICO scores. I have been to the Experian VantageScore website, and any mention of VantageScores tends to be buried at the very bottom of the page in very small font. Second, I hope that consumers are a bit more careful to read the fine print when it comes to their credit, whether it be purchasing their credit score or signing up for a new credit card. I seriously doubt that VantageScores and PLUS scores are going anywhere despite this lawsuit, so people need to understand the difference between PLUS scores and FICO scores. Lenders might not look at PLUS scores, but PLUS scores can be useful in assessing your overall credit health.

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