U.S. Banks are asked to provide free credit scores to consumers
CFPB requests top credit card companies and banks to provide free credit scores to their customers.
In a report released on February 27, 2014 the Director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, asked credit card issuers and banks to provide to their customers the credit scores that are used to make lending decisions for free. He also suggested that the credit card companies supply educational content to support consumers as they learn how to use their credit score to improve their financial health.
“Credit reports and scores can determine the terms of people’s mortgages, whether they qualify for auto loans, or if they are eligible for different credit cards,” said Cordray. “Making consumers’ credit scores freely available on their monthly statement or online makes it easier for them to spot problems with their credit report. We will continue to work to ensure that credit report disputes are fully investigated, errors are fixed, and consumers are treated fairly.”
The Counselor’s Corner reported that some card companies such as Discover have already agreed to provide credit scores on customers’ monthly statements.
In a previous article, A credit score is vital to your financial health, Michigan State University Extension explained that a credit score is a number that helps lenders and others predict how likely you are to make your credit payments on time. Each person’s score is based on the information in their credit report. Lenders do look at consumers’ credit scores all the time. They look at scores when deciding, for example, whether to change an interest rate or credit limit on a credit card, or whether to send you an offer through the mail. Having a good credit score makes your financial dealings a lot easier and can save you money in lower interest rates. That is why they are a vital part of your financial health!
Only one company is authorized to fill orders for the free annual credit report you are entitled to under law — annualcreditreport.com or 1-877-322-8228. However, that does not include a FICO® score. The FICO® credit score is still the most widely used score for lending decisions. But some lenders are beginning to use a Vantage Score also.
The FICO® Score has been the industry standard credit score used to determine more than 90 percent of lending decisions in the United States. FICO stands for Fair Isaac Corporation, which is the company that created the industry standard for credit scores.
So what is a VantageScore®? The VantageScore® was created by the three major credit reporting bureaus - Experian, TransUnion and Equifax - as a general purpose credit score that is an alternative to the Fair Isaac FICO® credit score. In addition, the VantageScore® was designed to enable more consumers with limited credit histories to receive a credit score for the first time when a credit check is completed.
MSU Extension is offering the free program, “Top 50 Tips: Be a Money SMARTY!” on Tuesday, April 8. The program will begin at 6 p.m. and is a part of Money Smart Week. To sign up for this program or to find other programs in Michigan, just visit www.moneysmartweek.org. Money Smart Week events are open to the public and cover topics including kids and money, unemployment, managing student debt, retirement and more.