According to the New York Times, a new credit law reform has amended the Fair Credit Reporting Act (FCRA) to require additional disclosures. Effective July 21, 2011, any individual or lender who uses a credit score to make an unfavorable decision must provide the following disclosures to the applicant for free:
- The actual credit score used to make the decision and the date of when it was created.
- Up to four major factors that hurt the score
- The range of the possible scores under the credit score model used (FICO is based on a point scale of 300 to 850; while VantageScore is on the scale of 501 to 990.)
- Where the score ranks in the nation
- The name of the credit bureau where the score was pulled from, so that the applicants can dispute any possible errors.
- Info on how to obtain a full credit report.
So who exactly is entitled to the above disclosures?
Anyone who applied for a loan (yes, including student loan) or a credit card and got denied; or approved at a higher-than-advertised interest rate.
- Any borrower of existing loan, whose loan terms were changed for the worse.
- Anyone who applied to rent a property such as house, apartment, business office, and etc….and was required to put down a higher security deposit or pay more for anything because of your credit score, the landlord must provide the disclosures above.
This reform should help a lot of consumers understand why they were denied or could not get the best rate. It was amended by The Dodd-Frank Wall Street Reform and Consumer Protection Act, and you can get a PDF copy of it at http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf.