New Act to facilitate free access to credit scores
Have you been declined for a credit card or a mortgage or a person loan, etc. on the basis of your credit scores? Are you not sure what exactly was wrong with your scores and why the lender or the credit card company considered you a risky borrower? Do you wish you had free access to your credit scores so you could identify the cause of the credit denial and take necessary steps to address the situation? Well, getting free access to your credit scores could soon be a reality and a dream come true for many consumers like you.
The Fair Access to Credit Scores (FACS) Act, proposed by Senator Mark Udall, aims at empowering the consumers with the right to claim free credit scores if they are denied credit or insurance based on their scores. As of now, consumers can claim a free credit report as per the Fair Credit Reporting Act, after they are denied credit. But if the FACS Act, which has recently passed the Senate, gets the final approval, consumers will also get free access to their credit scores. Let’s take a quick look at some of the key features of this Act:
* Entitlement to annual free credit scores: Just like the Fair Credit Reporting Act entitles you to an annual free credit report from each of the credit bureaus, the FACS Act proposes to give you free access to your scores once a year from each of the 3 major credit reporting agencies.
* Automatic access to the scores: If you are denied credit, you do not have to ask for your credit scores. The lender, insurer or whoever denies you credit, will be required by law to provide you with your free credit scores, irrespective of whether or not you ask for it.
* Unlimited access to your scores: There is no limit to the number of times you can get your free credit scores. It all depends on the number of times you are denied credit. If you are denied credit say 20 times, you will get to view your scores for free 20 times.
* Entitlement to a particular credit score: If your application for credit is rejected based on your FICO scores, but the lender or the insurance company provides you with a score other than FICO, it will do you no good. Hence, the FACS Act makes sure that you receive exactly the same score that was used in the transaction.
How is the FACS Act expected to affect lenders?
The FACS Act, if implemented, is expected to make credit score requirements more transparent. The Act will require the lenders to disclose your credit scores when they send you a declination letter informing about the denial of credit. Once you know your credit scores, you are likely to ask for an explanation as to why the lender did not get you approved. This will put pressure on lenders to make their credit requirements as clear as possible so as to avoid dealing with customers demanding explanation for the denial of credit.
How important is the Act for consumers?
The FACTA amendments to the Fair Credit Reporting Act (FCRA) allows consumers to have free credit report. But they do not presently have free access to the credit scores. The credit scores are important from a consumer’s point of view as a lot of things depend on them. The credit scores can affect a consumers eligibility for a loan. He/she can either be approved or denied for the loan, depending on his/her credit scores. Even if a consumer does qualify for the loan, the interest rates and terms on it will depend on his/her credit scores. Thus, credit scores are very important for a consumer and he/she should be entitled to free credit scores. Once the FACS Act is implemented, it will no doubt be a boon for millions of consumers.