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Mystery behind consumer credit scores unveiled in new study

Jan 05, 2013 Walt Wojciechowski

A new study done by the Consumer Financial Protection Bureau sheds some light on how consumer credit scores are determined.

The group did so by studying three of the largest credit-reporting companies - Equifax, Experian and TransUnion. The report found that 40 percent of the data these companies collect comes from bank cards, while 18 percent comes from retail credit cards. Therefore, low credit scores are generally connected to the handling of debt on credit cards. Less emphasis is put on mortgage and auto lending.

Debt collection was one of the most common issues which arose between these bureaus and consumers, roughly 40 percent of the total disputes.

This report is one step in the direction of greater transparency and clarity within the credit reporting world. Since every consumer relies on their credit score to take out loans, land a job or acquire the best insurance, the way in which this number is calculated is very important. However, according to the Boston Globe, only one in five consumers actually obtains copies of their credit files, even those they are free and easy to attain online.