All About Credit Cards

The financial reform bill will soon make free credit reports require free credit scores as part of it. Approved by the Senate on Monday was an amendment to the financial reform bill that requires credit reports to include a numerical score. Since 2003, Americans are entitled to get a free credit report once a year by law. The deal never included the actual credit score.

Article Source: Free credit scores to be required on free credit reports

Offers of free credit report

Free credit reports, for years, have been offered online. The internet has many scams saying they will give you free credit report offers. One site in particular, freecreditreport.com, lures consumers by offering a “free” score in return for signing up for a credit monitoring service that costs $ 14.95 a month, if they don’t opt out before the end of a seven-day trial period. In April, the Federal Trade Commission began requiring websites advertising free credit reports online to disclose their bait and switch up front, and direct consumers to the government-approved www.annualcreditreport.com. Radio and TV ads have to do the same starting Sept. 1.

Get free credit scores once a year

The free credit score measure in the financial reform bill expands a law that was actually passed in December 2003 that gives consumers the right to one free credit report once a year from each of the top three consumer reporting agencies — Equifax, Experian and TransUnion. CNNMoney.com reports that the credit score covers a consumer’s whole credit history — all debts, payment habits and jobs held. The credit score is widely used as a shortcut by most lenders, except payday loan companies. A survey from the National Foundation for Credit Counseling said 65 percent of adults haven’t checked their reports in a year. One third of adults don’t know what their credit scores actually are.

More on the financial reform bill

Making free credit scores mandatory on credit reports doesn’t really have much to do with the bill. But the New York Times reports that the adoption of the free credit score measure by an overwhelming margin underscores the desire by lawmakers to appease the electorate with pro-consumer initiatives in an election year. Senator Sheldon Whitehouse, Democrat of Rhode Island, is trying to get an amendment that gives states the right to limit credit card interest rates, regardless of where the issuing bank is located.

Is a difference going to be made with free credit scores?

Some feel that if consumers don’t realize that lenders use many scores to assess credit worthiness, free credit scores won’t make a difference. Boston.com reports that which version you’ll get depends on the credit bureau you go to. A company called FICO develops the most widely used scores. VantageScore is kind of popular. Ranging from 300 to 850, Equifax only gives FICO scores although TransUnion sells both to consumers. Experian gives VantageScore’s ranging from 501 to 990. There is no universal standard for the formula they use which is what gives different credit report scores.

Citations

www.annualcreditreport.com

https://www.annualcreditreport.com/cra/index.jsp

CNNMoney.com reports

http://money.cnn.com/2010/05/17/news/economy/credit_score_reform/?npt=NP1

New York Times reports

http://www.nytimes.com/2010/05/18/business/18regulate.html

Boston.com reports

http://www.boston.com/business/personalfinance/articles/2010/04/02/in_the_new_world_of_credit_reports_know_whos_looking_at_yours_and_why/