The financial reform bill will soon add meaning to government-mandated free credit reports by making free credit scores part of the reports. An amendment to the financial reform bill requiring that credit reports contain the numerical score was approved in the Senate on Monday. Americans are entitled by law to receive a free credit report once a year since 2003. The deal never incorporated the actual credit score.
Offers of free credit report
Free credit reports online are available for years. The internet has many scams saying they’ll give you free credit report offers. Freecreditreport.com, lures consumers by offering a “free” score in return for signing up for a credit monitoring service that costs $ 14.95 a month, if they don’t opt out before the end of a seven-day trial period. In April, the Federal Trade Commission started requiring web sites advertising free credit reports online to disclose their bait and switch up front, and direct consumers to the government-approved www.annualcreditreport.com. On Sept. 1, TV and radio ads must to the very same.
Once a year free credit scores
The free credit score measure in the financial reform bill expands a law passed in December 2003 that gives the right to one free credit report once a year from each of the top three consumer reporting agencies for each individual– Equifax, Experian and TransUnion. CNNMoney.com reports that the credit score covers a consumer’s credit history — all debts, payment habits and jobs held. With the exception of payday loans no faxing companies, the credit score can be used by most lenders as a shortcut so you will need to 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. Nearly one-third of adults do not know their credit scores.
More on the financial reform bill
The bill doesn’t have much to do really with making free credit scores mandatory on free credit reports. But the New York Times reports that the adoption of the free credit score measure by an overwhelming margin underscores the desire by lawmakers to appease the electorate with pro-consumer initiatives in an election year. Senator Sheldon Whitehouse, Democrat of Rhode Island, is pushing for an additional 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 what you get will depend on the credit bureau you go to. FICO develops the most widely used scores. VantageScore is kind of popular. Ranging from 300 to 850, Equifax only gives FICO scores although TransUnion sells both to consumers. Experian gives VantageScore’s ranging from 501 to 990. There is no universal standard for the formula they use which is what gives different credit report scores.
Citations
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/
