ST. LOUIS and WASHINGTON, D.C. — As the agency's new Consumer
Advisory Board met for the first time, the Consumer Financial Protection Bureau
declared its latest study shows discrepancies between the credit scores sold to
creditors, lenders and finance companies and ones sold to consumers.

CFPB officials contend the study found that about one out of
five consumers would likely receive a meaningfully different score than would a
lender.

"This study highlights the complexities consumers face in
the credit scoring market," said CFPB director Richard Cordray.

"When consumers buy a credit score, they should be aware
that a lender may be using a very different score in making a credit decision,"
Cordray added.

The Dodd-Frank Wall Street Reform and Consumer Protection
Act directed the CFPB to compare credit scores sold to creditors and those sold
to consumers by nationwide credit bureaus and to determine whether differences
between those scores harm consumers.

Officials explained the study analyzed credit scores from
200,000 credit files from each of the following credit bureaus: TransUnion,
Equifax, and Experian. It is a follow up to a study the bureau released last
July that described the credit scoring industry, the types of credit scores,
and the potential problems for consumers that could result from differences
between the scores they purchase and the scores creditors use.

The CFPB declared its study determined:

—One out of five consumers would likely receive a
meaningfully different score than would a creditor.

"When consumers purchase their score from a credit bureau,
the score they receive may be meaningfully different from the score that a
lender would consult in making a decision," the agency indicated. "A meaningful
difference means that the consumer would be likely to qualify for different
credit offers –
either better or worse – than they would expect to get based on the score they
purchased."

—Score discrepancies may generate consumer harm.

"When discrepancies exist between the scores consumers
purchase and the scores used for decision-making by lenders in the marketplace,
consumers may take action that does not benefit them," officials stated. "For
example, consumers who have reviewed their own score may expect a certain price
from a lender may waste time and effort applying for loans they are not
qualified for, or may accept offers that are worse than they could get."

—Consumers are unlikely to know about score discrepancies

"There is no way for consumers to know how the score they
receive will compare to the score a creditor uses in making a lending decision,"
officials stressed. "As such, consumers cannot exclusively rely on the credit
score they receive to understand how lenders will view their creditworthiness."

The bureau will begin supervising consumer reporting
agencies as of Sunday. The CFPB's supervisory authority will cover an estimated
30 companies that account for about 94 percent of the market's annual receipts.

The CFPB explained its examiners will be looking to verify
that consumer reporting companies are complying with federal consumer financial
law, including that the companies are using and providing accurate information,
handling consumer disputes, making disclosures available and preventing fraud
and identity theft.

Consumer Advisory Board Holds First Gathering

Also this week, the CFPB's 25-member Consumer Advisory Board
met for the first time in St. Louis. The complete list of members can be found
here.

"The board members truly represent the interests of the
diverse people and communities that we serve. From Hawaii to New York, they
cover the breadth of our country and the diverse American population of
consumers," Cordray said in remarks prior to the gathering.

"They are an eclectic group, comprising bank and credit
union executives, consumer advocates, and community development experts," he
continued. "Some have experience with consumer protection issues. Others are
experts when it comes to financial markets, financial regulation, or consumer
financial law. All of them care about consumers and are showing their
commitment to public service. We greatly respect and appreciate their
willingness to take on this task. So to each new member of the Consumer
Advisory Board, we say, ‘thank you,'"

Cordray hoped the two days of meetings would allow members
to consider a host of questions, including:

—What are the lingering effects of the financial crisis?

—What are the biggest problems facing consumers, credit
markets, payment markets, and markets for other consumer financial products or
services?

—What are some of the innovative and consumer-friendly
approaches we can employ or encourage to help improve the lives of consumers?

"As a brand-new agency, we are able to do things in new
ways," Cordray reiterated. "We are working to make research and market analytics
core to everything that we do. We use data — lots of data — and a team of
world-class economists, social scientists, and market veterans to figure out
what the data means.

"But we also value public participation," he went on to say.
"We intend to remain engaged with the public, sharing with them not only what
we are doing but how we are doing it. The Consumer Advisory Board will help us
achieve these goals."