Credit Reporting Agencies are as Logical as Flying Cows

One of the most frustrating things we consumers must deal with is the dreaded credit reporting agencies, like Experian, Equifax, and Transunion. I’ve previously written about credit reporting agencies including “Taking Advantage of Low Interest Rates Dropped my Credit Score by 40 Points” and “Why Did it Take Seven Months to Fix a Mistake on My Credit Report?” but the credit reporting agencies provide no end of material for someone who likes to write about dysfunctional businesses where poor service seems to the norm.

I am doing what a lot of people are doing – refinancing my home to take advantage of low interest rates. As part of that process the mortgage broker I am working with pulled my credit report. My mortgage broker provided me with a copy of my credit report – at least the one that she received. I am not sure if her system checked all the credit agencies, but the information she provided me was from Equifax.

Equifax reported my credit score at 778. According to the website a score of 778 is considered very good or even excellent. My broker said that based on my credit score I would have no problem getting a nice low interest rate mortgage. So, I should be happy. But I am not.

When I logged into my Equifax account and pulled my credit report and score (the very next day to the day on which the mortgage broker ran my report), Equifax told me my credit score was 804. To me it is just plain deceptive that Equifax gives me one credit score, and then gives a significantly lower credit score to my lender.

Now I understand that credit reporting agencies provide different credit score to different lenders. When I log into my Experian account, I get the following disclaimer: “Credit score is calculated based on FICO® Score 8 model, unless otherwise noted. In addition to the FICO® Score 8, we may offer and provide other base or industry-specific FICO® Scores (such as FICO® Auto Scores and FICO® Bankcard Scores). Your lender or insurer may use a different FICO® Score than FICO® Score 8 or such other base or industry-specific FICO® Score (if available), or another type of credit score altogether.”

Great. So, the credit reporting agencies provide difference credit scores to different types of lenders. Well, how about telling us what you tell those lenders? Is it too much for these billion-dollar corporations to program into their membership sites a list of the three or four most requested credit scores? So why am I paying $24.99 a month for access to my credit information, when this information is being withheld from me?

The good thing is that Equifax provided with its credit report on me some reasons why my credit score is what it is. Apparently, my credit score, even though good, has been negatively affected by several things on my credit report. What things? Well, let me tell you.

One was “TOO MANY CONSUMER FINANCE COMPANY ACCOUNTS.” I am not sure exactly what that means so I looked it up online. According to a consumer finance company is a “A non-bank lender. A consumer finance company does not receive deposits but does make loans to customers for business or personal use. It derives its profits from the interest on these loans. It is also called simply a finance company. “

Then I looked at my open accounts. I have 10 credit cards all issued by banks, I have one first mortgage from a credit union which I think qualifies as a bank, I have a student loan from the federal government, and I have a home equity line of credit from Figure Lending. That means I have exactly ONE consumer finance company account. But according to Equifax one consumer finance company account is too may. Tell me how that works.

Another negative item on my Equifax credit report was “NUMBER OF NATIONAL OR REVOLVING ACCOUNTS WITH BALANCES.” Those national and revolving accounts are my bank issued credit cards. Yes, I have ten. How many had balances? Three. None of those are carried balances. I pay all my credit cards off each month. So, is it three credit card balances that Equifax thinks is too many? Or is it three out of ten that is too many? It would be nice if we could know but as Experian says, “How many credit cards are considered “too many” will vary depending on both your individual credit history, who is looking at your credit report, and the scoring system they are using.” So, it is impossible for anyone to tell whether they have too many cards, or not.

A third negative item on my credit report from Equifax was “TIME SINCE MOST RECENT ACCOUNT OPENING IS TOO SHORT.” Why this is even a criterion confuses me. Savvy consumers are constantly opening new accounts and closing out old accounts. We pay off car loans, we get new credit cards to take advantage on better reward programs, we put major purchases on credit like furniture or appliances. Of course, it would be nice to know how much time we are talking about. Good luck if you can find it. After much research I couldn’t. All I could find was the following sentence on “Your FICO Scores may consider the time that has passed since you opened a new credit account, for specific types of accounts.” Just for the record, my most recent account was opened in April. The credit report was run five months later. At least we know for me five months was “too short.”

The fourth negative item on my credit report from Equifax was “TOO MANY INQUIRES LAST 12 MONTHS.” Ok. So how many credit inquiries did I have in the last twelve months? I had nine. One of those was from the mortgage broker who also processed my last refinance. Of the remaining eight, seven of them were credit inquiries from mortgage companies that provided financing for properties held in the name of my company. Those mortgages are also in the name of my company. But when my company finances a property, the lenders still check my personal credit. Why an inquiry from a lender lending money to my company should appear on my personal credit report baffles me. And of course, what exactly is “too many?” Well thanks to an article at we know that “hard inquiries represent just one part of the bigger picture that makes up your credit scores—and a small one at that.” No specific number is given like three is okay, four is bad. Apparently in my case nine inquiries in a year (less than one per month) is enough for it to negatively affect my credit score.

I’m lucky. I make a good income, I have accumulated a significant net worth, and I understand this foolish system enough to be able to maintain a good credit score. But can you really believe a system as wacky as the one I have described in this article dictates how much consumers can borrow and how much they pay in interest? Machiavelli himself could not have devised a more dysfunctional and convoluted system. Three huge corporations make billions from this system every year. And we all accept it as if this system was as normal as flying cows.