New Rule Requires Lenders to Disclose Credit Scores

Today, the FTC and Fed Reserve announced that lenders will be required to provide free credit scores to borrowers when the lender uses a credit report to set high interest rates or other loan terms that aren’t the best available. Lenders would also need to provide credit scores when they deny credit, change the terms of an existing credit arrangement or refuse to grant credit in the amount or on the terms requested. Various credit scores are marketed to consumers, but those scores aren’t necessarily the ones banks and other lenders are using to make credit decisions according to experts....

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Credit Bureaus Gathering More Info on Consumers to Sell to Lenders

The WSJ reports that credit bureaus and Fair Isaac are beginning to sell new types of financial information to banks for purposes of evaluating credit applications. The bureaus are offering to report on your rent and utility payments, income, home’s value, and evaluate your banking activities. Fair Isaac, who invented the FICO credit score will report on customers’ bank deposits, balances, and withdrawals. The credit bureaus are estimating customers’ income something the Federal Reserve allows lenders to do in order to satisfy new requirements that credit-card applicants show the ability to pay their debts. The bureaus look at your credit...

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Most Credit Cards Are Unfair according to Study

A report by most credit cards in the U.S. include at least one practice that qualifies as “unfair and deceptive” under new Federal Reserve guidelines set to go into effect in 2010, according to a report from the Pew Safe Credit Cards Project. Reviewing consumer credit cards issued by the 12 largest companies, and which represent 88% of outstanding credit card debt, the researchers found: • 100 percent of cards allowed the issuer to apply payments in a manner which, according to the Federal Reserve, is likely to cause substantial monetary injury to consumers. • 93 percent of cards allowed...

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Consumers’ Credit Reports Remain Substantially Inaccurate, According to Federal Lawmakers

4 out of 5 credit reports contain an error, and a quarter of those errors cause serious problems, according to today’s news from Washington. Yet the 2003 law that was supposed to make it easier for consumers to guard against identity theft and to freely access their credit reports is still not final. The Fair Credit Reporting Act’s 2003 amendments were supposed to make it easier for consumers to access and correct mistakes in their credit reports. But House Financial Services Committee members today criticized the FTC and the Federal Reserve for not implementing final rules from the 2003 law,...

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New Credit Card Rules Proposed by Federal Reserve

Credit card companies are endorsing the Federal Reserve Board’s proposal to mandate better disclosure of credit card terms to consumers, apparently hoping that more disclosure will head off Congressional attempts to outlaw some of the practices consumers complain about the most. Kathleen Day of the Washington Post has been following the dynamic between some lawmakers’ attempts to prohibit some of the worst industry practices and the Federal Reserve’s proposal to disclose those practices but keep them legal. As Kathleen Day’s article (discussed above in Mark Anderson’s May 27 post) points out, some of the worst industry practices include “universal default,”...

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