SOURCE Consumer Data Industry Association
WASHINGTON/PRNewswire-USNewswire/ -- "We applaud the Consumer Financial
Protection Bureau's credit score report that was released today. We
think it puts an end to the debate over the value of educational scores
versus those scores lenders use," said Stuart K. Pratt, president and CEO of the Consumer Data Industry Association.
The CFPB study concluded that "correlations
across the results of the scoring models were high." As a result, it
determined "that for a majority of consumers the scores produced by
different scoring models provided similar information about the relative
creditworthiness of the consumers. The study found that different
scoring models would place consumers in the same credit-quality category
73-80% of the time."
"The study sheds new light on why consumers
can trust the credit score disclosures they receive and the products in
the commercial marketplace that help consumers build a deeper
understanding of their credit scores and how they affect their financial
decisions. Consumers want to be proactive in learning about their
scores. Unfortunately, too many mixed messages have made them hesitant
to access the data currently available that will help them better
understand the scoring process. This study is good news for consumers
who can now be confident that the disclosures and services they are
getting today are helping to empower them to receive better prices
tomorrow in the credit market," stated Pratt.
The study was built on the foundation of two
key facts made clear in the Bureau's 2011 report and reiterated again in
this study:
- "Given this
complexity it is unlikely that a consumer will often be able to know the
exact score that a particular lender will use to evaluate them."[1]
- "Lenders use credit scores produced by many different scoring models." [2]
"The CFPB is right," said Pratt, "no one
score is used by all lenders. However, the credit score is a valuable
educational tool and can enable consumers to better understand their
creditworthiness relative to other consumers." As the CFPB's report
notes, the many credit score options in the marketplace today will help
consumers answer these questions. CDIA recommends that when consumers
obtain their credit scores they should ask these important questions:
- What credit scoring model was used?
- What's the scale?
- What does the score I received mean in terms of lending risk?
- What are the key factors affecting my credit score?
- How might my future financial decisions affect my credit score?
CDIA's members are global leaders in the
development of credit score technology. While the CFPB was not charged
by Congress with studying every effective and reliable credit score in
the marketplace, this report shows that all such scores designed using
the same common principles will help educate consumers with equal
effectiveness.
In support of the CFPB's study, the CDIA will
fund a new series of public service announcements focused on
encouraging consumers to read the CFPB's report, obtain their credit
scores and also, in support of the Consumer Federation of America's
latest credit score poll, avail themselves of resources that are
available to better understand what does and doesn't affect a credit
score.
[1] July 19, 2011 CFPB Report, "The impact of differences between consumer- and creditor-purchased credit scores," Pg. 18.
[2] July 19, 2011 CFPB Report, "The impact of differences between consumer- and creditor-purchased credit scores," Pg. 1.
