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Wednesday, July 20, 2011

Credit Scores Disclosed for Free Starting Tomorrow ...

but only when you suffer an adverse action based on a credit report, such as when your credit application is denied.

Starting tomorrow, July 21, 2011, the latest amendments to the Fair Credit Reporting Act go into effect.  The new amendments require lenders or other users of credit scores to include those scores on their adverse action letters they send consumers who suffer the adverse actions.  The publication of the score will be in addition to the reasons for the adverse action and the identity of the consumer reporting agency whose report was used in the decision to deny credit already required to be part of the adverse action letter.

This is a helpful change to the law.  Before, consumers would only know what score was assigned to them during a credit application if litigation resulted and the lender's files were subpoenaed.  Scores purchased even thirty seconds later from the consumer reporting agency could bear little resemblance to the score used in the adverse action, since lenders often use their own credit scoring models, which differ from the credit scoring models used by the CRAs.  If you do buy a score, buy it directly from FICO, as that's the scoring model most lenders use.

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