Why You Need To Review And Check Credit Report Items
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New Congressional Bill Would Guarantee Free Credit Reports And Access To Scores Nationwide
by Kenneth R. Harney
http://realtytimes.com/rtcpages/200...editreports.htm
New, bipartisan legislation proposed on Capitol Hill last Thursday could help mortgage applicants nationwide who are frustrated with their credit scores or errors on their credit files.
For starters, the "Fair and Accurate Credit Transactions Act of 2003" (HR 2622) would allow all Americans to know what's on their three credit bureau files in advance of applying for a loan. Sponsored by Rep. Spencer Bachus (R-AL), chairman of the House Financial Services and Consumer Credit Subcommittee along with two Democratic colleagues, the bill would allow consumers to request one free credit report per year from the three major bureaus-- Equifax, Experian and TransUnion. It would also entitle consumers in any state to receive their credit scores along with the credit reports, plus an analysis of how the consumer could improve on his or her score.
Currently only California and Colorado residents have the legal right to free access to credit reports once a year, plus guaranteed access to any credit scores used in a loan decision. Five other states allow residents to request a free copy of their credit files--but not obtain their scores--once a year.
Equally significant, the bill would appear to give a boost to so-called "rapid rescoring" for mortgage applicants. It directs the national credit bureaus to promptly investigate any disputed consumer credit information that is brought to their attention by "intermediaries who consolidate reports for mortgage lenders," according to a statement by the subcommittee.
These "intermediaries" typically are regional or local credit reporting companies that mortgage lenders or brokers use to access loan applicants' files from the nationl bureaus. About 150 of these firms offer "rescoring" services, which allow quick corrections of erroneous information contained in a national bureau's files. The rescoring normally is fast enough--72 hours or less--to allow an applicant to obtain a new score, based on the corrected data, in time to continue the application process.
Rescoring--a relatively recent development that is generally restricted to home mortgage loans--works like this: Say a consumer wants to buy a home with a mortgage at the lowest available interest rate. Because of credit reporting errors made by banks or merchants, however, the home buyer's credit bureau files contain negative information that lower his or her credit scores below the threshold needed to qualify for the loan and desired rate.
Under the traditional, time-consuming method of correcting errors, the applicant would have to spend a month---or maybe a few months--corresponding with each of the national credit bureaus to get the bad information deleted. The application for the mortgage would have to be withdrawn in the meantime, possibly causing the home buyer to lose the house to a competing purchaser.
But under rapid rescoring, a loan applicant who has letters from creditors verifying the negative information on their files is erroneous, can get it deleted immediately. The rescoring firm, working under contracts with the national bureaus, submits the corrections directly to their electronic credit files.
Terry W. Clemans, executive director of the National Credit Reporting Association, welcomed the subcommittee's reference to "intermediaries" who work with the mortgage industry. Many of his association's members have rescoring contracts permitting them to assist mortgage applicants whose scores are artificially depressed by bad information.
Rescorers work for lenders and broker clients, not directly for mortgage applicants. Charges for the credit file corrections vary widely, and are dependent upon the number of entries corrected. Charges for the service may exceed $100 to $200 in some cases.
The new legislation is expected to be marked up by the Financial Services committee in the near future, and go before the full House this summer.
Published: June 30, 2003
Major Credit Reform Bill Passed Unanimously by House Subcommittee
by Kenneth R. Harney
http://realtytimes.com/rtcpages/20030721_reform.htm
A far-reaching piece of bipartisan reform legislation affecting millions of American home buyers and refinancers was passed unanimously last week by a House subcommittee.
The House Financial Services Subcommitee reported out the “Fair and Accurate Credit Transactions Act of 2003”: (HR 2622) after holding six hearings involving over 100 witnesses this spring. The bill, which is expected to pass the full committee and the House by the Fall, would overhaul key elements of the current credit reporting system and would seek to reduce the incidence of identify theft.
Home buyers and home equity loan applicants should notice several key changes as soon as the bill emerges from Congress:
Free credit reports. Under current law only a handful of states require the big three national credit bureaus--Equifax, Experian, and TransUnion--to provide one free credit report, on request, to any resident of the state per year. Under the new federal credit reform bill approved last week, this would become the standard rule, nationwide. You will be able to write to all three bureaus once a year, and say: Send me what you’ve got on me, at no charge, so I can correct anything that’s wrong.
Credit score disclosure. Thanks to an amendment by Rep. Bernard Sanders (I-VT), the bill would require credit bureaus to provide you your credit score, as computed from their own credit databases, once a year at your request. And if you forget to ask for the score when you request your credit file, the bureau would be required to notify you that you can obtain your score, plus an explanation of what factors may be depressing your score.
Under current law, you have no right to see your credit score except in California and Colorado, where disclosure is mandatory. At least once a year, in other words, all Americans will be effectively guaranteed the right to do a comprehensive “credit check” on themselves, examining their credit file data from the bureaus and their individual credit scores from each bureau.
Notification of consumers by creditors when they plan to send negative information to the credit bureaus. A potentially huge advance for consumers concerned about misinformation in their credit reports, this provision sponsored by Rep. Gary Ackerman (D-NY), would require creditors to provide notification about all derogatory information, in writing, to the consumer.
To illustrate: every time a credit card company, department store or mortgage company believes you were late on a payment, it would have to notify you that it is reporting that negative information to the credit bureaus. The notification would have to be mailed or emailed to you no later than 30 days after the creditor sends it to the bureaus.
Think about the impact this could have on the widespread problem of mortgage applicants being charger higher rates because of erroneous negative information sitting in their credit files, depressing their scores. If the new bill passes Congress later this year, you will know whenever a bank or credit card company botches up the facts. And with the notification in hand, you’ll be better equipped to challenge the negative information and get it corrected.
Of course, if the creditor has the facts right--and you did indeed skip a payment or sent it in late--you’ll know that your credit files will reflect these facts, and your scores will decline as a result.
Published: July 21, 2003
