New Rule Requires Lenders to Disclose Credit Scores
Today, the FTC and Fed Reserve announced that lenders will be required to provide free credit scores to borrowers when the lender uses a credit report to set high interest rates or other loan terms that aren't the best available. The new rule will likely go into effect in July 2011.
Lenders will also need to provide credit scores when they deny credit, change the terms of an existing credit arrangement or refuse to grant credit in the amount or on the terms requested.
Various types of credit scores are marketed to consumers, but those scores aren't necessarily the ones banks and other lenders are using to make credit decisions according to experts. Under the new rule, consumers will see the actual credit scores creditors are using to make decisions. The rule will apply to financial products such as mortgages, credit cards and auto loans.
