New Federal Reserve/FTC rules comply with Udall’s 2010 Credit Scores AmendmentLenders will soon be required to disclose credit scores to consumers when their scores are used against them to set poor credit terms or when the lenders deny access to credit altogether, which will significantly increase financial clarity for consumers.
Today, the Federal Reserve and Federal Trade Commission issued final rules to implement the bipartisan amendment proposed by Mark Udall that was included in the Dodd-Frank financial overhaul Congress passed last summer. Under Dodd-Frank, the Udall credit score disclosure provision is to take effect July 21, exactly one year after the enactment date of the landmark Wall Street reform legislation.
Currently, consumers do not have free access to their credit scores and ultimately have to purchase rights to their scores. Even worse, these scores often aren’t the same as the ones used by lenders to gauge an applicant’s creditworthiness, and bad scores can lead to higher interest rates. Because of Udall’s bipartisan amendment, this will change in the next couple of weeks; lenders will now be required to provide actual credit scores to consumers for free if their credit scores are used against them.
“Your credit score is a vital sign of your personal financial health, and it impacts everything from qualifying for a loan to renting an apartment,” Udall said. “I sought to protect consumers by pushing this amendment and am thrilled that it - for the first time ever – will give Americans free access to their credit scores.”
John Ulzheimer, president of consumer education for SmartCredit.com, said the new regulations would be “hugely empowering” for consumers.
This means that “any financial-services product you apply for where you’re denied or adversely approved based on a score, you’re going to get the score, which is historical,” he said. (Wall Street Journal, March 1, 2011)
Udall believes the rules will allow consumers to be armed with all the necessary facts in order to make informed decisions in their financial planning, something essential for today’s hard economic times.
“By seeing the clearest picture possible of their personal finances, consumers can actively work to improve their scores,” Udall said. “As we work to bring accountability to Wall Street banks, whose misdeeds contributed to the economic recession, let's not forget that we need to create some additional common-sense rules of the road to help Colorado families build healthy financial futures.”
Watch Udall on the Senate floor in 2010, when he introduced the Free Access to Credit Scores Act, and then when he argued for the amendment after resistance from lobbyists.
