Dodd-Frank Allows Consumers To Get Free Credit Scores When Denied Of A Loan

by San Antonio Attorney

Starting today, consumers who are declined of a car or credit card loan are going to get free copies of their credit scores.

The Dodd-Frank financial reform bill that had been passed a year ago stretches the rules of disclosing credit scores and puts the duty on financial institutions to show the figures to the U.S. consumers. Also, it pushes loan companies to provide credit scores without charge to customers who are not qualified to receive the best possible rates when borrowing money. Such practice is referred to as risk-based lending.

The objective for the law would be to give people more information and better access to their credit ratings, according to Senator Mark Udall, who suggested the provision. By having a clear picture of their finances, consumers can have the opportunity to work to increase their credit scores.

The law is applicable to companies that provide financial services using credit scores to grant loans. Typically, scores are derived from models set up by FICO. They are utilized by lenders to assess the financial health of a consumer. The credit scores range between 300 to 850, and they have an effect on the consumer’s ability to obtain mortgage loans, credit cards, and insurance plan, and even the interest rates consumers pay for the money borrowed. Based on the existing laws, every consumer is entitled to get free credit reports every 12 months, but not their real credit scores.

The Consumer Financial Protection Bureau starts its operations today. It is in charge of making sure that loan providers conform and provide free credit scores to consumers who are declined of credit or don’t receive the best interest rates. Earlier this week, Richard Cordray was nominated by President Barack Obama to lead the bureau.

Those who cannot get their credit scores for free under the rule have to fork out $19.95 on myFICO.com to obtain a FICO report and credit score.

The government has taken steps to create legislation to further protect its citizens but these laws can get complex and oftentimes its takes an experienced attorney to interpret them.  If you are overwhelmed with debt, it may be a good idea to seek help from a San Antonio bankruptcy attorney.

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