A key portion of the Dodd Frank act, named for Senator Chris Dodd (pictured) and Rep. Barney Frank, takes effect this year. Image from Wikimedia Commons.
There are a new set of rules taking effect this year concerning credit scores. The financial reform bill, or the Dodd Frank financial reform act, changed federal laws regarding reporting of credit scores. If a person is applying for any large loans in the future, these are good things to know.
Change in credit scores law starts in July
On July 21, 2011, a provision of the Dodd Frank Wall Street Reform and Financial Protection Act, or the Dodd Frank Act will take effect, according to USA Today. The new regulations say when people apply for loans — such as a personal loan, large installment loan or mortgage loan — and get denied or get approved for a higher interest rate, the loan lender has to give them a copy of their credit report for free.
Other provisions enacted earlier
This is the second provision of the Dodd Frank Act to take effect this year. On Jan. 1, a related provision took effect that has to do with what is called “risk based pricing.” Risk based pricing is prices or interest rates that are determined by credit score, like a mortgage on a cabin in Scottsdale, Arizona, or a loan for a new car. Similar to the other law that takes effect in July, people who qualify for an interest rate higher than what was desired have to be notified of risk based pricing and instructions on how to get a free copy of their credit reports.
Always a good time to raise credit scores
There is never a bad time to do a little credit repair. The better a person’s scores, the better the rate he or she will qualify for when trying to get a credit card or get a loan that requires a credit check. These laws won’t have an effect on most payday lenders, who generally do not check credit scores.
Get professional credit repair help
Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.
