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Show Me the Credit Score

Show Me the Credit Score

 

          Starting the middle of this month, lenders who deny a borrower credit or offer a higher-than-normal interest rate are required to show the borrower his credit score.

          This new policy is part of an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act that passed exactly one year ago. Introduced by Sen. Mark Udall, D-Colo., it requires creditors to provide additional information in adverse action notices if a credit score was used in making a credit decision.

          Senator Udall said the credit scores to which consumers previously had access were often not the same as those lenders used to gauge an applicant's creditworthiness. Bad credit scores, of course, can mean higher interest rates and less-favorable loan terms.

          Now when lenders such as banks or credit card companies use credit scores to deny credit or offer an unusually high interest rates, they must disclose not only the relevant scores to the borrowers but also what influenced how their scores were arrived at, the range of possible scores under the model used, the date the score was created and the name of the entity or person that provided the score.

          Being aware of your credit score can save you dollars, time and frustration.  The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

           The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.

          To order, visit annualcreditreport.com, call 1-877-322-8228 ftc.gov/credit.  You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.

 

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