Credit agency Experian has been named in a lawsuit in California. The suit is a potential scandal within the credit industry. Experian is one of the three main credit bureaus, along with TransUnion and Equifax, and credit ratings from those bureaus are used in creating a persons’ credit score. The suit may become a class action lawsuit, and Experian is alleged to have committed fraud. Article source - Credit bureau Experian accused of fraud in California lawsuit by MoneyBlogNewz.

Websites for free credit reports might not be giving right information

Plaintiffs in the California lawsuit against credit agency Experian are saying the bureau has defrauded. Credit rating copies are sold at some sites Experian works with. MSNBC states that Experian is giving these websites misleading information according to the suit. The wrong score is given through certain websites, supposedly, by Experian. FreeCreditReport.com and FreeCreditScore.com are these websites. The online websites, which charge a $14.95 per month fee to users so they can monitor their credit rating activity, provide the Experian PLUS score. The class action lawsuit is what the plaintiffs want. This is because any lender giving out personal loans may look at something else when reviewing the credit rating.

Most loan providers use FICO scores to decide

When looking at a person’s credit score, loan companies do not look at the score. They do not look at the score the bureau gives anyway. Most loan companies just use the scoring system Fair Isaac and Company came up with. This is the FICO score. Fair Isaac scores are calculated by looking at certain data about a person and coming up with a numerical rating of that persons’ credit worthiness. Experian, Equifax and TransUnion all produce credit scores with the FICO formula, and those scores are reported to loan companies. The PLUS score wouldn’t be used when someone applies for quick installment loans or job which is why Experian is being charged with fraud. The suit claims Experian misled customers by advertising worthless information for sale. Experian had to be compelled by threat of a Federal Trade Commission suit to advertise the link to the government site where customers can request the one free report from each bureau that people are allowed by law.

Employers should back off

There have been labor rights advocates working hard right now. This is due to the idea that employers can check the credit scores of applicants. At least half of the United States isn’t either; 49 bills in 25 states are currently before state legislatures to legally bar employers from checking credit scores of a potential new hires. Several advocates of civil rights believe that employers do not have the right to review credit scores even though companies say that it helps them determine if an employee is going to be a problem.

Articles cited

MSNBC

redtape.msnbc.com/2011/04/lawsuit-experian-sells-misleading-credit-scores.html

USA Today

usatoday.com/money/workplace/2011-04-07-credit-reports-in-hiring-decisions.htm

Technorati Tags: , , ,