May 18, 2010
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News: Senate Approves Credit Score Amendment
Lawmakers want to take the 2003 law that requires Equifax, Experian and TransUnion to issue credit cards customers and all Americans one free credit report annually one step further. The Senate voted on Monday to include a provision which gives credit card customers and all Americans who have been denied credit or a job free access to their credit score. As Senate continues to debate the Wall Street reform bill, the National Foundation for Credit Counseling (NFCC) found that nearly 33 percent of Americans do not know what their credit score is. Most likely because it can cost anywhere from $15 o $30 to buy a credit monitoring service that would include the credit score. Although a credit report includes the significant elements of a consumers financial history including payment histories on mortgage and auto loans, credit card accounts, other personal loans, as well as negative elements such as bankruptcies, judgments, and collection accounts, it does not include the credit score.
In addition to the payment histories of all credit accounts, an individual's credit score considers credit card limits and the amount of available credit. All the elements of a credit report are synthesized to arrive at the individual's credit score. Lenders and employers often use this number to determine eligibility for a credit card account, mortgage loan or job. It can be very frustrating to individuals who have been turned down without an understanding on how to rectify the situation. The most commonly used credit score is the FICO score, a product of the Fair Isaac Company, however, each of the three credit reporting bureaus calculate their own credit score which follows closely with the FICO score with slight variations.
The amendment was propose by Senator Mark Udall (D-CO) who says it should "dramatically increase the number of people" who have free access to their credit score each year. What constitute acceptable scores? It varies by the service an individual's applying for. In the case of a mortgage loan, most lenders look for individuals with a 680 or above with 740 being the most ideal. Looking for a new credit card or student loan? You'll likely need a score of 700 or above for approval. Employers look for bankruptcies and debt collection accounts.