In response to language successfully added by Congresswoman Niki Tsongas to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau today released their study of consumer credit scores, examining the difference in access that consumers have to credit information about themselves versus the access that lending institutions have.
Congresswoman Tsongas introduced the legislation after hearing from a number of constituents who were frustrated at not having the same access to their own credit score as the lenders who make decisions about the amount of credit they can access and the interest rate they receive on their mortgages, car loans, private student loans, and credit cards.
Validating these concerns, the CFPB found that fully 1 out of 5 consumers receives a "meaningfully different" score about him- or herself than the lender receives. According to the report, these differences affect both consumers who over- and underestimate their true ability to obtain credit: consumers "might be likely to apply for credit lines that would not be approved," which could further harm their credit scores because previous rejections are considered by potential lenders; or might "apply to lenders who offer less favorable terms" and "accept less favorable offers," resulting in "higher interest costs and possibly higher likelihoods of default due to the greater costs and difficulty of making monthly payments."
"While some large financial institutions have claimed that consumers aren't harmed by the current system, this study confirms that many are," said Congresswoman Tsongas. "As the CFPB begins to actively monitor the credit bureaus, I will be working with them to help level the playing field to ensure consumers are given the most accurate and effective tools possible."