Credit Score Reporting Hurts Mortgage Clients

The three major credit reporting agencies are now being sued over a case of selective reporting. The practice, which can lower a credit score, has far reaching affects for those trying to obtain a mortgage.

Credit scores have affected the type and price of mortgages since the idea of a credit score was born. The better the credit score, the better the loan. But a new case against the top three credit bureaus is accusing that the agencies are not using proper methods to report credit scores. Equifax, Experian and TransUnion credit bureaus are the three agencies that usually report a credit score when it comes to mortgages, a system that can raise or lower a mortgage according to a number. The accusers say that the agencies allow Capitol One to withhold information in its reporting, potentially lowering scores.

As one of the largest credit card companies, Capitol One does the most damage by not reporting credit limits. Some other smaller companies do the same, but the effects of that withholding is not as far reaching. By not providing the credit limit, Capitol One is trying to keep competitive companies from stealing their clients; it also lowers a credit score by making it appear the person has reached their maximum credit limit. By pulling a credit report each year (a free service), consumers can protect themselves from this practice.