The Federal Reserve has established a new webpage to remind consumers about credit rules that went into effect on January 1. These new rules, issued by the Fed and the Federal Trade Commission set standards for credit score information lenders must provide to persons seeking certain types of credit.
Consumers may receive one of several types of notices regarding their credit score or the reasons why they may have received less than an optimum loan product when they apply for credit through a bank, credit union, or other lender. Lenders may, depending on circumstances, provide a Credit Score Notice, a Risk-Based Pricing Notice, or, in the case of existing credit, an Account Review Notice.
There are different Credit Score Notices for mortgage loans, auto loans, or other types of credit, but each form provides the consumer with essentially the same information. This notice will be provided regardless of the terms of credit offered by the lender.
- The consumer's credit score and the source and date of that score
- An general explanation of credit scoring
- How the lender uses the score
- A description of the range and distribution of scores in the general population
- A list of the key factors that may have adversely affected that consumer's score
- Information on how to dispute the score and obtain free credit reports.
An alternative form is available to inform consumers if credit information was not available from one or more reporting agencies.
The Risk-Based Pricing Notice is provided to consumers who are offered credit on terms less favorable than those offered to other consumers because of the information on their credit report or reports. That form provides:
- A definition of a credit report and what it contains
- An explanation of how the lender used the credit report information and that it resulted in the offer of less favorable terms.
- Information on how the consumer can dispute information on the report and contact information for the particular agency which provided the report.
A fourth form, an Account Review Notice, is provided to consumers when the APR on an existing credit account is raised because of credit report information. Other than the title and that the reason for providing the form is a change in rate, the form is identical to the Risk-Based Pricing Notice. Neither of the two risked-based pricing forms provide for information on the consumer's credit score or on the specific adverse information on the report which led to the negative decisions.
The website also provides consumer information disputing inaccurate credit report information and obtaining an annual free credit report.
