The Federal Trade Commission and Federal Reserve finalized regulations earlier this month, making it easier for consumers to obtain free credit scores. The ruling stems from the Dodd-Frank financial overhaul that Congress passed in 2010 and will require banks to provide consumers with their credit scores if they're to be used regarding credit decisions
. According to The Wall Street Journal, this will help determine how lenders judge reports when deciding whether or not to offer funding.
On July 21, the new regulations will go into effect, and will be overseen by the government's new consumer watchdog organization, The Consumer Financial Protection Bureau. "While they pushed for tweaks to the draft rules, consumer advocates have generally welcomed the Fed and FTC move to require lenders to disclose credit scores to consumers," Maya Jackson Randall and Jeff Bater wrote for the source. "The disclosure of credit scores and other related information to consumers of mortgages, credit cards and auto loans will promote simplicity, access, accountability, fairness and transparency," they added, citing Appleseed, a network of public-interest groups. According to CreditCards.com, the information will be disclosed to consumers through a form which will reveal their scores, their ranges and which factors negatively impacted their scores. Factors including high debts or late payments typically affect a consumer credit report
. "If you deny someone credit, and it's in whole or part based on a credit score, you're required to send the credit score," says Rebecca Kuehn, assistant director with the division of privacy and identity protection at the FTC, to CreditCards.com While this move is positive for consumers, some financial industry leaders don't see it as so and have urged the agencies to delay the ruling by a year. The agencies, however, denied the request, and companies must instead follow the regulations as soon as next month, or with 30 days of their being published in the Federal Register, noted WSJ. For consumers whose credit report was damaged during the recession, this could be beneficial as it may allow them to see what steps they should take to improve their ranking and qualify for loans.