Lenders to disclose credit score when making adverse loan choice


If you ever thought Washington moves at a snail’s pace, listen to this.

There was a law passed 8 years ago requiring, in part, that you be shown your real credit score if a lender used it to penalize you on the interest rate or turn you down for a loan altogether. But only now is tjhe law coming into effect!

What’s commonly called “risk-based pricing” is especially prevalent when you’re talking about car loans. Credit unions, for example, will give their lowest auto loan rates to those with top credit. But the credit unions use a scale where they don’t tell you can’t get a car loan if you have bad credit, they just raise the rates as your score goes lower.

It’s always been a kind of a mystery exactly how a lender decided your interest rate. Now the curtain is being pulled back under new enforcement of that 8-year-old law.

I think of this as kind of a “negative positive,” because you will now get the real credit score and other data they relied upon to make an adverse decision about your loan.

The now-defunct Washington Mutual bank used to give customers their real credit score on monthly bank statements as a free promotional item. When WaMu sold its credit card portfolio to a big bank, that big bank eliminated the free credit score feature so they could keep your info as a big secret.

The reality is that it is your dossier and credit bureaus profit off that dossier. I just don’t understand why people in the banking business have this big thing about secrecy where they keep your own info secret from you. If I get cynical for a moment, I would say it’s because they can charge you more money when you don’t know. Knowledge is power.

As I mentioned, this happens often when you finance a car at a dealership. If you don’t know your credit, the dealership will psych you into thinking you’re a poor credit risk and they were the big heroes for securing loan money on your behalf at a high interest rate. Baloney!

Remember, you can always check your credit for free at AnnualCreditReport.com, where you’ll be able to see what your credit is actually looking like right now.

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