The financial reform bill will soon add meaning to government-mandated free credit reports by making free credit scores part of the reports. Approved by the Senate on Monday was an amendment to the financial reform bill that demands credit reports to include a numerical score. By law, Americans are entitled to free credit reports at least once a year given that 2003. The actual credit report has never been part of the deal.
Free credit report offers for you
For years, free credit report offers have been available. The Internet is infested with scams disguised as free credit report offers. One site in particular, freecreditreport.com, offers a “free” score in return for signing up for a credit monitoring service that will cost $ 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 began 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 exact same.
Free credit scores once a year
The free credit score measure within the financial reform bill expands a law that was really passed in December 2003 that gives consumers the right to one free credit report once a year from each of the top three consumer reporting agencies — Equifax, Experian and TransUnion. CNNMoney.com reports the credit score covers a consumer’s entire credit history — all debts, payment habits and jobs held. Except for pay day companies, the credit score is widely used as a shortcut by most lenders, so monitoring it is crucial. Yet a recent survey from the National Foundation for Credit Counseling found that some 65 percent of adults have not checked their reports within the past year. One third of adults have no idea what their credit scores really are.
More on the financial reform bill
Making free credit scores mandatory on free credit reports has little to do with the broad scope of the financial reform bill. But the New York Times reports the adoption of the free credit score measure by an overwhelming margin underscores the keen desire by lawmakers to appease the electorate with initiatives in an election year. Senator Sheldon Whitehouse, Democrat of Rhode Island, is trying to get an amendment that gives states the right to limit credit card interest rates, regardless of where the issuing bank is located.
Are free credit scores going to make a difference?
Some feel that if consumers don’t realize that lenders use many scores to assess credit worthiness, free credit scores won’t make a difference. Boston.com reports that which version you’ll get depends largely on the credit bureau you go to. FICO develops probably the most widely used scores. VantageScore has gained popularity. TransUnion sells both to consumers, but Equifax only sells FICO scores, which range from 300 to 850. Experian gives VantageScore’s ranging from 501 to 990. You’ll get different credit report scores because there is no standard formula that is used by all.
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/
