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Featured Advisor

Ed Meek
CEO/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

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A Credit Score Report Doesn't Get Total Credit

A credit score report might not tell the whole story, but can still affect your ability to borrow.

Consumers may be giving their credit score report too much credit, says a new federal watchdog agency charged with regulating financial products.

Variations in credit reports sold to borrowers and lenders may leave consumers wondering why they’ve failed to qualify for more favorable loan conditions or any credit at all, according to the fledgling Consumer Financial Protection Bureau. The agency, created by the Dodd-Frank Walls Street Reform and Consumer Protection Act of 2010, opened its doors in July of this year. Among other things, the Dodd-Frank Act charged the bureau with reviewing the differences between credit score reports purchased by consumers and those used by lenders to evaluate whether an applicant is a safe credit risk.

The Senate Banking Committee yesterday approved Obama’s nomination of Richard Corday as the first director of the bureau, though his nomination by the full Senate is not as certain. According to the online Financial Advisor magazine, Republicans have vowed to block any nominee until the structure of the bureau is changed in such a way to reduce its power and impose more oversight on its activities. Consumer groups have publicly urged Congress to approve the nomination.

Despite a leadership void, the bureau has launched efforts to simplify mortgage disclosure forms, measured the effects of theCredit Card Accountability, Responsibility and Disclosure Act of 2009, and has examined the different models used by credit reporting agencies to create a credit report score.

 Consumer reporting agencies compile information on consumers borrowing habits to produce credit reports that quantify a consumer’s chances of defaulting on a loan, said the bureau in a prepared statement. The reports, based on the data collected by the reporting agencies, are used to set terms for mortgages, raise or lower credit limits and determine other important criteria affecting borrowers.

 Both borrowers and lenders purchase credit scores – borrowers to look for blemishes, mistakes and signs of identity theft, and lenders to look for a strong credit history -  but the Consumer Financial Protection Bureau has found that “the credit scores available for purchase by consumers may vary from the score used by a lender.”

 A credit score report can vary according to the model used to create the report and by the credit reporting agency used. The information used to calculate a score is constantly changing, so reports purchased by lender and borrower can be based on data from different reporting periods. 

Many consumers lack information about credit scores in general and do not know a credit report represents the risk of not repaying a loan. “Furthermore, many consumers do not know that credit scores they buy may not used the same credit scoring models that are most widely used by lenders,” said the bureau. “Consumers who are unaware of the variety of credit scores available in the marketplace may purchase a score believing it to be their 'true' score."