The massive financial reform bill passed by the Senate last week doesn’t just impact Wall Street. The bill, awaiting reconciliation with the House version, touches every day consumers affected by credit.
With the approval of an amendment to the bill proposed by Sen. Mark Udall (D-Colo), many could soon have free access to their credit score. Since December 2003, consumers have been able to get their credit report for free once a year from annualcreditreport.com. Georgia residents have additionally been entitled by the Fair Business Practices Act to two free credit reports from each reporting agency per year.
However, despite the craftily worded advertisements for “free” scores that come with a $14.95 credit monitoring service subscription, there was no way to get your credit score without paying for it. With the passage of the Fair Access to Credit Scores Act, anyone denied insurance, loan or utilities or given unfavorable terms based on their credit score and report can get free access to the score used as a determining factor.
“I believe it’s only fair to allow consumers access to their credit score when it is used against them to deny credit, require a higher interest rate on a loan or prevent an applicant from being hired for a job,” said Sen. Johnny Isakson (R-Ga) in a statement. Employers often use credit reports, but do not have access to credit scores.
According to a National Foundation for Credit Counseling survey, 31 percent of people do not know their credit score. The doors have not swung wide open, but for people negatively impacted by the score — a shortcut used by lenders rather than digesting the details of a credit report — knowing how a score affected a lender or insurance company in its decision is important, said John Ulzheimer with Credit.com.
“The score has become the most important component of underwriting,” Ulzheimer said. “Not only does this make common sense, it’s very timely when lenders are making it more difficult to get a loan.”
Consumers could potentially know how close they are, for instance, to getting a prime rate on a loan.
Udall told the Denver Post after the vote: “It’s simply not fair for lenders to have access to a consumer’s all-important credit score without the consumer being given equal access at no cost. My common-sense amendment will help restore some fairness to hardworking Americans who want every opportunity to improve their financial futures.”