If lenders or other entities use information from your credit file or a credit score to determine interest rates or other terms, regulations now generally require that they send you a notice explaining how that information was used. All of the various types of credit granted to consumers are covered by these regulations, including mortgages, auto loans, credit cards, and utilities. The goal of these notices is:
All applicants who are approved for credit, regardless of the terms, may receive this type of notice. Score disclosure notices are likely to provide:
Some consumers may see a different scale related to their credit scores. In fact, there are many credit score providers and many different credit score scales. To aid in understanding, notices will likely include a graph that provides a visual representation of how a consumer’s score compares to other scores across the country using the same credit score model.
If a lender chooses not to send a score disclosure notice, it will send a risk-based pricing notice to consumers who are approved for credit.
Lenders who take an “adverse action” against consumers based in part on a consumer credit score must provide the credit score they used in making their decisions. The Federal Trade Commission (FTC) defines “adverse actions” to include “all business, credit, and employment actions affecting consumers that can be considered to have a negative impact,” such as:
In addition to the score, an adverse action notice will likely include much of the same information contained in the score disclosure notice.
Wonder what those VantageScore reason codes really mean? Easy translations just a click away.
There are lots of commonly held myths about correcting credit reporting errors. Make sure you know the truth.