WASHINGTON A bipartisan duo of Senate Banking Committee members revived legislation Thursday that would require mortgage lenders and credit reporting agencies to provide customers with their credit scores and a summary of what the grades mean.
Consumers need access to the same information lenders and credit reporting agencies use so that they can make wiser decisions that will improve their credit score, Sen. Charles Schumer, D-N.Y., said at a news conference where he and Sen. Wayne Allard, R-Colo., announced they are reintroducing the Consumer Credit Score Disclosure Act, which stalled last year.
The measure, backed by real estate agents and consumer advocates, would prohibit credit reporting agencies from banning mortgage lenders from disclosing credit scores. It also would require lenders to tell consumers how their score was calculated and what credit behavior could raise their grade.
The Mortgage Bankers Association has not taken a position on the Schumer-Allard bill, but its chief lobbyist, Howard Glaser, said Congress should avoid placing additional costs on borrowers and lenders or making the process of obtaining a home loan more complex.
Citing Freddie Mac data, Sen. Schumer said roughly 379,000 subprime borrowers have credit scores that would make them eligible for less expensive prime rate loans, and that as a result, Americans overspend about $100 million a year on their mortgages.
Fair, Isaac & Co.s consumer affairs manager, Craig Watts, said the Schumer-Allard measure is not necessary because in March the credit-scoring firm reversed its policy that defined the scores as proprietary, and began selling consumers their own grades for $12.95. A persons Fair, Isaac score is also available, to that person only, through the credit reporting agency Equifax Inc. Some online companies sell credit scores, but not the ones calculated by Fair, Isaac that are used by most lenders in making credit-granting decisions.
The impetus for Fair, Isaacs policy change was a California law that as of July 1 requires lenders to give customers a copy of the credit score obtained to solicit a loan or accept a loan application.
In the House, Rep. Harold Ford Jr., D-Tenn., introduced a bill in April that would require lenders to disclose the scores on a consumers request, as well as provide free annual credit reports.
From Our Archive