Experian will pay $3 million in credit score case
LOS ANGELES — Credit bureau Experian will pay a $3 million fine to settle a federal regulator’s claims that the firm sold credit scores that were of little or no use to consumers.
The Consumer Financial Protection Bureau announced the fine and settlement Thursday. The bureau’s allegations against Experian are similar to those made against the nation’s two other major credit bureaus, Transunion and Equifax, which reached a larger settlement in January.
In all three cases, the agency said the credit bureaus offered consumers until at least 2014 “educational credit scores,” which are different from the scores the credit bureaus provide to lenders.
Credit card issuers, mortgage lenders and others generally use the ubiquitous FICO score, calculated by San Jose, Calif., firm Fair Isaac Corp. using data from the credit bureaus. The bureaus have to pay Fair Isaac to run the scores.
The government agency said Experian, like the other bureaus, offered its own score to consumers and misleadingly implied those scores were “the same type of information lenders see when assessing your credit.”
The credit bureaus’ inhouse scores often are fairly close to FICO scores but sometimes can be dramatically different, according to a 2012 CFPB report.
Thousands of consumers with FICO scores of 680 to 740 had educational scores that were much higher or lower, the report said, putting them into different credit categories — great, good, fair, etc. — about 20 percent of the time.
In its order, the CFPB acknowledged that Experian, headquartered outside Los Angeles, disclosed that its educational scores were not the scores used by lenders, but the bureau argued that the disclosures were not prominent enough.
Experian did not admit or deny wrongdoing in the settlement, and spokesman Gerry Tschopp said the company does not believe it violated the law.