Knowing About Credit
January 20, 2011
Establishing credit and maintaining a good credit history are important elements in lenders or credit card issuers decisions about extending credit.
Sad to say, the present recession has had a serious effect on many consumers' credit history and on their credit ratings. While a consumer may not be able to obtain a home loan with a FICO score under 620, the consumer may also have to pay a higher interest rate on credit cards.
The Federal Reserve has recently published an online brochure designed to help consumers better understand their credit scores and any new notices that they may receive from creditors.
The publication, "What You Need to Know: New Rules about Credit Decisions and Notices", describes the types of notices that consumers may receive and provides links to sample notices. It includes information about what consumers should do if they receive a notice, including instructions on how to dispute credit report errors.
The notices are require by rules issued by the Federal Reserve Board and the Federal Trade Commission. These new rules took effect January 1, 2011. They require a creditor to provide a notice when the creditor provides credit to the consumer on terms that are less favorable than the terms provided to other consumers. If a consumer receives this notice, the consumer will be able to obtain a free credit report to check the report's accuracy. As an alternative to providing the risk-based pricing notice, creditors can choose to provide consumers who apply for credit with a free credit score and information about their score.
Underlying these new rules is the impetus to provide more transparency for the consumer about credit issues.
Establishing credit and maintaining a good credit history are important elements in lenders or credit card issuers decisions about extending credit.
Sad to say, the present recession has had a serious effect on many consumers' credit history and on their credit ratings. While a consumer may not be able to obtain a home loan with a FICO score under 620, the consumer may also have to pay a higher interest rate on credit cards.
The Federal Reserve has recently published an online brochure designed to help consumers better understand their credit scores and any new notices that they may receive from creditors.
The publication, "What You Need to Know: New Rules about Credit Decisions and Notices", describes the types of notices that consumers may receive and provides links to sample notices. It includes information about what consumers should do if they receive a notice, including instructions on how to dispute credit report errors.
The notices are require by rules issued by the Federal Reserve Board and the Federal Trade Commission. These new rules took effect January 1, 2011. They require a creditor to provide a notice when the creditor provides credit to the consumer on terms that are less favorable than the terms provided to other consumers. If a consumer receives this notice, the consumer will be able to obtain a free credit report to check the report's accuracy. As an alternative to providing the risk-based pricing notice, creditors can choose to provide consumers who apply for credit with a free credit score and information about their score.
Underlying these new rules is the impetus to provide more transparency for the consumer about credit issues.
posted by shirley harry at 8:37 AM
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