Consumers buying new homes may find themselves accepting loan transactions that either overvalue or undervalue their credit histories, potentially leading to poor credit choices.
The Consumer Financial Protection Bureau released a report Tuesday, saying one in five consumers receive credit scores from mainstream credit bureaus that conflict with scores used by lenders. A homebuyer’s credit score contributes to the overall interest rate on a mortgage, and can impact affordability issues.
The CFPB was charged by the Dodd-Frank Wall Street Reform Act to study the differences between commercial credit reports and those used by lenders to determine the effects on mortgage holders and consumers taking out lines of credit.
The CFPB analyzed 200,000 credit files from TransUnion, Equifax($46.30 -0.32%) and Experian and concluded that while most consumers obtain similar credit reports from both sources, there is a substantial minority who end up with conflicting scores.
The bureau warns that this is bad for consumers who may end up accepting substandard deals based on credit reports that may be either too positive or negative than their actual credit level.