NEW YORK — A new rule that went into effect in January requires lenders to inform you if a poor credit score resulted in less favorable terms for your loan, such as a higher interest rate.
Another rule to become effective this summer will tighten the disclosure requirements so that lenders will have to give more borrowers free copies of their scores.
Under the rule that went into effect Jan. 1, lenders have two ways to meet new disclosure requirements. One is to furnish the borrower with a copy of the credit score that was used to make the decision, as well as disclose which of the credit bureaus — Equifax, Experian or TransUnion — provided the score.
However, lenders also have the option to provide a letter stating the borrower was given a less-than-favorable rate because of his or her credit risk. This notice must also disclose which credit bureau provided information to the lender.
But on July 21 another regulation closes that loophole, and lenders will no longer have a choice in the type of notice they provide. If a credit score is used to deny a loan or give unfavorable terms, the lender must disclose that score to the consumer. Candice Choi, The Associated Press
