As it is right now, the three major credit bureaus – Equifax, Experian and TransUnion – are required to release credit reports to consumers once every 12 month period. But for whatever reason, you have to pay up if you want to know what your scores are. This all may be coming to an end very soon.
The Free Access to Credit Scores Act (FACS Act) passed Senate approval last week and is very close to becoming law. According to the bill’s sponsor, Senator Mark Udall (D – Colo.) claimed on his website that:
“My legislation will amend the Fair Credit Reporting Act to require credit-rating agencies to divulge credit scores, free of charge, to consumers when they access their free annual credit report.”
What This Means for You
You won’t even need to ask for their credit scores if you’ve been declined because the prospective lender will be required to give it to you. Every time anybody pulls your credit reports and scores and denies you for credit, a loan, an apartment, a job or whatever you’re applying for, the adverse action letter will disclose the credit score used to make the decision.
Currently, only a handful of Americans pull their credit reports, let alone know their own credit scores. As a credit repair company we know first hand that most people don't have the slightest clue about pulling their credit scores. And yet we live in a society with an ever-increasing importance being placed on those scores. The additional fee to acquire your credit scores further discourages people to the point where they don’t even bother.
Who’s Against the Bill
Creditors are very afraid that the bill will force them to become more transparent when it comes to their score requirements. There are bound to be a lot more complaints when people are denied and they know exactly what their credit score is. Lenders don’t want to disclose their lending requirements because they feel that their “intellectual property” is being publicly broadcast.
Credit bureaus stand to lose a portion of their revenue as well. However, their main source of income, the lenders that pay to report to them, will remain unchanged. Consumer Data Industry Association’s president and CEO Stuart Pratt went so far as to say, “The proposal is unfair because it requires companies that spend millions of dollars developing highly predictive credit scores to give away their intellectual property."
This Will Cause Americans to Become More Involved
Even though the credit bureaus were against the 2003 laws that made it possible for us to get our credit reports once a year, those same bureaus have seen their business triple in that time. Everybody from apartment managers to potential employers to utility companies are checking credit reports these days. We as consumers need to follow suit to make sure our credit scores, which are a representation of our financial circumstances and borrowing power, are accurate and as valuable as we can make them.
Senator Udall stated, “I would dare to predict that when you have free credit scores it’ll only enhance the interest on the part of consumers to have additional financial literacy.” I could not agree more. How are we supposed to improve our credit profiles if the credit bureaus want to withhold, or at least make us pay for, the most vital factor in some of life’s most important decisions?
I invite you to take a look at Senator Mark Udall’s blog to take a more in-depth look at what he’s calling “a common-sense bill.” Hopefully enough people see it the same way, and the bill becomes a law. Taking the guess work out of applying for loans or credit would truly be a blessing that American consumers could use.
