Last week, the comprehensive Dodd-Frank Wall Street Reform and Consumer Protection Act went into effect. Under this law, lending institutions must provide consumers who are denied credit with a free copy of their credit score and an explanation regarding the reason for rejection.
The act applies to consumers rejected for student loans, car loans including bad credit auto financing, and credit card applications.
The law also applies to any consumer who is deemed “adversely approved,” which means being approved at less than the best rate. Companies in the insurance, telephone, and utilities sectors are exempt from this regulation.
Any consumer denied credit based on a low VantageScore or FICO score is entitled to the credit score, denial explanation, and details about how to obtain a credit report.
Long before they are rejected for credit, consumers should be aware of the information in their credit report. This report contains data that can affect much more than credit card or loan financing decisions. Consumers can find their housing or employment applications rejected based on their credit score or report.
A reporting error can tarnish the credit report so consumers should request that inaccuracies be corrected immediately. Of all information included on the report, payment history carries the most weight. Accounts that are in arrears by 30 to 60 days should be brought current before the credit score suffers.
Some creditors agree to remove collection accounts from the report at the request of the consumer.
Individuals carrying credit card balances should make at least minimum payments if paying off all balances is not possible. They can save money by transferring high balances to cards with zero percent interest balance transfer deals and paying off the aggregate balance within this promotional period.
Cash-back programs offered by some credit card issuers help consumers keep more money in their pockets.
[...] New U.S. Credit Card Legislation Takes Effect [...]