The financial reform bill will make free credit scores a mandated part of free credit reports. An amendment to the financial reform bill requiring that credit reports consist of the numerical score was approved within the Senate on Monday. By law, Americans are entitled to free credit reports at least once a year given that 2003. But the actual credit score, which is the only data in free credit report offers that lenders would care about, hasn’t been part of the deal.
Free credit report offers
Free credit reports, for years, have been offered online. The internet has a lot of scams disguised as offers for free credit reports. One site in particular, freecreditreport.com, offers a “free” score in return for signing up for a credit monitoring service that will cost $ 14.95 a month, if they do not opt out before the end of a seven-day trial period. In April, the Federal Trade Commission started requiring websites advertising free credit reports online to disclose their bait and switch up front, and direct consumers to the government-approved www.annualcreditreport.com. TV and radio ads must do the exact same starting Sept. 1.
Free credit scores once a year
The free credit score measure in the financial reform bill expands a law passed in December 2003 that gives consumers the right to one free credit report once a year from each of the top 3 consumer reporting agencies — Equifax, Experian and TransUnion. CNNMoney.com reports that the credit score covers a consumer’s entire credit history — all debts, payment habits and jobs held. With the exception of payday loans companies, the credit score will be used by most lenders as a shortcut so you should monitor. Yet a recent survey from the National Foundation for Credit Counseling found that some 65 percent of adults have not checked their reports in the past year. One 3rd of adults have no idea what their credit scores look like.
The financial reform bill extras
Making free credit scores mandatory on credit reports doesn’t really have much to do with the bill. But the New York Times reports that the adoption of the free credit score measure by an overwhelming margin underscores the keen desire by lawmakers to appease the electorate with initiatives in an election year. Senator Sheldon Whitehouse, Democrat of Rhode Island, is pushing for one more amendment that gives states the right to limit credit card interest rates, no matter where the issuing bank is located.
Are free credit scores going to make a difference?
Some experts are skeptical that free credit scores won’t really make a difference if consumers don’t realize that lenders use multiple scores to assess credit worthiness. Boston.com reports that which version you’ll get depends on the credit bureau you go to. The most widely used scores are developed by FICO. VantageScore has gained popularity. TransUnion sells both to consumers, but Equifax only sells FICO scores, which range from 300 to 850. Experian sells VantageScore’s, which range from 501 to 990. You’ll get different credit report scores because there is no standard formula that is used by all.
More info on this topic
www.annualcreditreport.com
https://www.annualcreditreport.com/cra/index.jsp
CNNMoney.com reports
http://money.cnn.com/2010/05/17/news/economy/credit_score_reform/?npt=NP1
New York Times reports
http://www.nytimes.com/2010/05/18/business/18regulate.html
Boston.com reports
http://www.boston.com/business/personalfinance/articles/2010/04/02/in_the_new_world_of_credit_reports_know_whos_looking_at_yours_and_why/
