President Barack Obama today signed the sweeping financial reform legislation into law.
What does that mean for consumers?
Credit score: It may be several months away before it is actually implemented, but consumers will now be provided the actual credit score lenders used if the consumer is denied a loan or approved with disadvantaged terms. This is applicable to lenders, insurance companies, landlords and retailers. So, if you apply for insurance and you’re told no, the insurance company must provide you with the score it used in making its decision. This gives the consumer greater insight and makes the lenders more transparent.
“It completely takes the guess work out of it,” said John Ulzheimer of Credit.com.
Mortgage lenders: Fraudulent loans may not be a thing of the past, but they just become more difficult to pull off. That’s because lenders must now verify the borrower’s ability to repay the loan. If lenders do not comply, they will face heavy penalties.
“It will change how lenders do business,” Ulzheimer said. “They have to have proof of income so they can justify your ability to pay back the bill. Before, people could make up whatever they wanted to say about their income.”
Debit card fees: Have you ever wanted to use your debit card, but couldn’t swipe unless you made a minimum purchase? Well, that’s because banks charge businesses for debit card transactions. In doing so, the merchant can’t afford to let every little purchase be made with a card. Now, the fees must be “reasonable and proportional to the cost incurred in processing the transaction.”
Retailers would be allowed under the bill to offer discounts to use cash. They can still set a minimum purchase amount to use cards, but the Federal Reserve would have the authority to set the minimum. This bill would set the minimum to start at $10, according to CBS News.