In the past, American consumers struggling with a history of credit card debt problems and less than favorable credit scores were either denied credit or offered credit at much different terms than those offered consumers with better credit scores. The practice of offering credit with unfavorable terms did not require an explanation from the lending institution in the past but beginning on January 1 2010 unexplained terms that do not compare to those offered to better “credit risk” consumers will be a thing of the past.
The Federal Reserve Board and the Federal Trade Commission, in compliance with laws passed by the United States Congress in 2003, has announced that new consumer protection rules that will require lenders to provide the consumer with a notice detailing the reasons that they were not able to extend better terms. Consumers will also be allowed the opportunity to receive a credit report or possibly requesting their credit score from the lender. Credit Scores are generally only available to the consumer for a fee at this time. The rules will cover all forms of consumer credit and will include credit cards, auto loans, and mortgages.
The benefits of this legislation for consumers are many. Being able to see their credit report as needed and being given their credit score will provide a more accurate picture what needs to be done to correct any errors contained in their report and to clean up the results of past credit mistakes. The overall effect is a more informed consumer with the tools and ability to handle finances more successfully.
