Ripoff Alert: World's Biggest Credit Score Agency Has Been Deceiving People

It now appears that all three of the biggest credit reporting firms have been tricking customers into paying for credit scores that don't deliver as promised.

The main reason people pay to find out their credit scores is to get the same info that banks and other lenders use when judging if someone is worthy of credit. But Experian—the biggest credit reporting company in the U.S. and around the world—must now pay a $3 million fine for allegedly "deceiving consumers about the use of credit scores it sold," according to the Consumer Financial Protection Bureau (CFPB).

"In its advertising, Experian falsely represented that the credit scores it marketed and provided to consumers were the same scores lenders use to make credit decisions," the CFPB stated. "In fact, lenders did not use the scores Experian sold to consumers."

Experian accepted the judgment, although it admitted no wrongdoing. And the credit reporting giant wasn't the only one overhyping the scores it sold.

In January, the CFPB fined Equifax and TransUnion, the next two largest credit reporting firms, for a total of $23 million to settle similar claims. As my colleague Megan Leonhardt wrote at the time of the last CFPB judgment:

Equifax and TransUnion routinely advertised their credit scores as being the same ones banks use. But lenders tend to use a variety of credit scores, so no one rating is universally accepted, the CFPB points out in Tuesday's announcement. The agency also found that the TransUnion and Equifax scores sold were not, in fact, the ones used to make loan decisions—and that, in fact, Equifax’s scores are calculated to create a model that it describes as being for “educational” purposes.

Credit reporting firms charge customers a wide variety of fees for their services. For instance, after a free seven-day trial Equifax charges $19.99 per month to get what it calls your "3-Bureau Credit Score," based on information from all three big credit reporting agencies. Experian's website states that it charges a flat $14.95 to get your credit report and score and have the ability to share it with others.

In addition to the CFPB fines they must pay, Experian, Equifax, and TransUnion have all agreed to change their marketing practices and become more transparent about exactly what customers are paying for—and also about what consumers can get for free. Under the Fair Credit Reporting Act, everyone is entitled to a free copy of their credit reports once a year via AnnualCreditReport.com.

For many people, another free way to gauge your creditworthiness is simply to look at your credit card statement. Many banks list customer credit scores on those monthly statements at no charge whatsoever.