The Consumer Financial Protection Bureau (hereafter “CFPB”) will be publishing the results of a study on credit scores some time in September 2012. The CFPB performed a smaller study earlier in 2012 and concluded that the fact that there are many scores could lead to consumer confusion and even frustration with spending money on a score that isn’t the same score that lenders use when making decisions.
The challenge with any study on the nature of the credit scoring environment is what to do with the results. What if the results come back suggesting that the fact that you have 49 FICO scores and countless non-FICO scores is not healthy for consumers? The CFPB, which is brand agnostic, would not likely endorse the use of any one scoring tool.Further, there’s a good reason why there are so many different scoring tools in the marketplace today…many of them do different things, a benefit that could not be replicated by only one uniform scoring tool.
I believe the agency will conclude that there is value and that there are problems with the fact that there are so many scores. Consumers are grossly undereducated on the topic of scoring and depending on banks and credit bureaus to teach them about the tool is simply unrealistic. If the CFPB would take a walk down the path of what’s being said about credit scores on the Internet they’d probably also conclude that what some self-proclaimed experts are saying about credit scores is also incorrect, which doesn’t help the issue of education.
At the end of the day a more fruitful endeavor would be to explore ways to expose consumers to better education on the topic. Not doing so is problematic as healthy credit scores mean cheaper credit and better terms from lenders and service providers. Improving your credit scores should be on your list of wealth building strategies.