As part of the financial reform bill, starting today borrowers are entitled to their credit score if they are denied or offered a higher than normal rate. They are entitled to this without even having to ask, for free, with the ostensible purpose of arming the consumer with more information about why they received the answer they did. Credit scores were never freely available to consumers before, and this new law will ensure many people who might never or rarely ever see their credit score to stay aware.
This is a great idea, but as with most laws, there are still plenty of loopholes to get caught in and complications to be aware of. Many banks, for example, use a proprietary rating system in determining one’s loan status. If this is their only measuring tool, they don’t have to disclose anything to you. If they use it in conjunction with your normal credit rating, they only have to release the latter, which can paint an incomplete picture and leave it unclear why you got the loan you did (or didn’t). Other industries with complex credit rating practices include utilities and insurance companies. One notable case where this will likely be of uncomplicated use to consumers is with landlords, according to John Ulzheimer, president of consumer education at SmartCredit.com. If they point to your credit score as a reason for refusing to rent or demanding a large deposit, you’ll be able to access it and understand why.
In the end, increased information in the hands of consumers is a good thing, even if it won’t always be as informative as one might think. But understanding what information is available to you and what it means is key for getting a good deal, and we always strive to be as informative as we can be for just that reason here at LogicBUY.