Have you applied for credit and been denied? Were you alerted by a credit agency that there was a change in your credit score? Most people have no idea what their credit score is, mostly due to the difficulty in obtaining such information. The government allows for consumers to have access to a free copy of their credit report every year. Consumers have to pay to obtain your credit score for a more in-depth look at your credit standing. As part of the Dodd-Frank Wall Street Reform & Consumer Protection Act, a new credit disclosure rule will allow consumers to have access to their credit score for free. However, this new rule comes at a price.
The new rule that allows for a free copy of credit scores is only offered to those that are denied credit. The average consumer won’t benefit from this rule and will continue to have to pay for access to their credit score. Starting July 21, lenders will be required to supply loan applicants with their credit score if they are denied credit or offered less favorable terms. The lender must provide a copy of the applicants score, the date the score was created, information about the credit reporting agency and up to four factors that have impacted the applicants score. Finding out your score isn’t up to par after you apply and are denied may seem unhelpful, but the rule does provide a system that has not been available in the past.
Consumers that have been denied credit and provided with the information set forth by the new rule will have a chance to improve their standing. Most people never check their credit standing before applying for credit. People go to apply for a loan, only to find out they have too much debt to qualify. Those that are able to obtain detialed information about their credit score will be able to evaulate the best way to improve their score before the reapply for credit. Applicants that are denied will be provided with the name of the credit reporting agency, which can shed light on the credit score that is reflected. Not all credit agencies report the same score, and scores can differ greatly between agencies. Consumers will now be afforded an opportunity to contact an agency to inquire about how their score was determined and what steps that can take to improve it. This new rule, whicd is part of the recently enacted Dodd-Frank Wall Street Reform & Consumer Protection Act, is just one step the Federal Reserve and Federal Trade Commission is taking to better protect consumers.