January 13, 2011 (Jeff Alan)
The Federal Reserve announced a new online publication yesterday that helps consumers better understand new notices they may receive from lenders when credit scores or credit reports affect a decision go grant credit. Almost all credit decisions made by lenders use a consumers credit history when deciding whether to extend credit and at what cost.

The publication describes the types of notices a consumer 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 publication is a result of new rules, which took effect January 1, 2011, by the Federal Reserve Board and the Federal Trade Commission. The new rules generally require a creditor to provide a consumer with a notice when, based on the consumer’s credit report, the creditor provides credit to the consumer on terms that are less favorable than those provided to other consumers.

Consumers who receive this “risk-based pricing” notice will be able to obtain a free credit report to check the report’s accuracy.

As an alternative, creditors can choose to provide consumers who apply for credit with a free credit score and information about their score.  Today, most consumers must pay a fee to obtain their credit score.

The publication gives examples of credit score notices not only from a mortgage application, but also auto loan applications and other types of credit applications like credit cards. If you don’t have a credit score, you would receive a lenders notice which would identify which particular credit bureau did not have a credit score available for you.

The new publication can be viewed here: “What You Need To Know: New Rules about Credit Decisions and Notices”

Tags: federal reserve, lenders, credit, credit scores, mortgage, auto loans, other loans, credit score notice, credit report, credit bureau