The FTC and Federal Reserve Move to Unify Credit Score Rules
On March 1 both the Federal Trade Commission and the Federal Reserve announced proposed rules that would unify the credit score disclosure requirements in the FACS Act (Fair Access to Credit Scores Act), which is part of Dodd-Frank, the Risk Based Pricing Rules, which are part of the Fair Credit Reporting Act, and ECOA Regulation B.
The Risk Based Pricing rules, which went live on January 1st 2011 were thought to have solved the “credit score disclosure” problem, yet most lenders were simply avoiding the issue by choosing the non-score disclosure option. The Fed/FTC move, while probably not in response to lender actions, serves the same purpose by requiring a score disclosure for a declination or adverse approval by July, which is the same requirement under the FACS Act.
As of right now the proposed changes to the Risk Based Pricing Rule are entering the public comment period. Still, it’s hard to imagine the public not wanting to see their credit scores if they were used to deny them credit or charge them more in interest on an approved account. If all goes as planned, and there’s really no reason to expect differently, consumers who are denied credit or adversely approved (approved but with less than great terms) will see their actual credit score by July 22, 2011.
It’s almost as if someone finally realized, “Guys, we have 3 laws here that say almost the same thing. Let’s make them consistent.” The bottom line: It’s looking good that on July 22, 2011 Dodd-Frank, The Fair Credit Reporting Act and ECOA Reg B will all require that credit scores be disclosed if a consumer is denied credit or approved with less than attractive terms. Now we just need to convince lawmakers to apply the same rules to insurance companies, property management companies and utility providers.
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.