Senator Udall: “I think Americans need to know the actual credit scores that are being used to judge their creditworthiness, so my staff and I worked with the Treasury Department, Banking Committee Chairman Dodd and his staff, consumer groups, industry stakeholders, and experts like yourself and your Credit.com colleagues to craft the adverse action-based legislative language that was signed into law.” Senator Udall: ”One of the great pieces of the Wall Street reform bill that I think has gone largely overlooked is that the new Consumer Financial Protection Bureau will assume regulatory oversight of most credit reporting agency operations, including consumer credit scores. Credit scores have emerged as the single most important factor impacting consumers’ interest rates, monthly payments on home loans, and they even affect a consumer’s ability to buy a car, rent an apartment and get phone or Internet service. The credit reporting agencies and their lobbyists claim that credit scores are their intellectual property—in other words, that a credit score to gauge the creditworthiness of a consumer, based on that consumer’s personal information, is in fact the property of the credit reporting bureaus, not the consumers whose livelihood depends on them. But as I see it, that argument would equate to a Doctor saying that someone’s blood pressure reading is their proprietary information, not their patient’s. I fully intend to work with the CFPB to further improve consumers’ access and understanding of their own credit scores, and make sure consumers have access to the actual scores that are being used to build consumers’ financial identities and judge their creditworthiness.” Senator Udall: ”I think this legislation was a great step forward, and that it will indeed have a tremendous impact on consumers and their awareness of their financial standing. But I will work with regulators and my Congressional colleagues to provide Americans with greater access and understanding of their credit scores—from the basic importance of paying bills on time to understanding how changing credit card limits can have a huge effect on credit scores—so that consumers can take steps to bolster their credit scores before they apply for an auto loan or a home mortgage. And I think this issue goes beyond the convenience of helping Americans secure the best possible interest rates or helping them qualify to purchase a home or car. I really believe that the single-most effective step we can take to ensure we do not experience another financial meltdown is to improve financial literacy and personal responsibility. And the simplest and most important element to building financial literacy and a good fiscal standing is having an understanding your own credit score.” Senator Udall: ”Yes, I do know what my FICO scores are, and I check my credit reports regularly. I’m glad you are promoting personal financial responsibility!” Thank you to Senator Udall for spending time on this interview. And, thank you to Adam Jones from the Senator’s office for helping to facilitate the discussion. John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry.
The FACS Act is the first piece of legislation that guarantees all consumers, who’ve gone through a credit-based adverse action —the ability to see their score, assuming a score was used as part of the adverse decision. Where did you get the idea and basis for this piece of legislation?
Assuming the FACS Act goes over well, do you see a FACS Act Part 2 that mandates free scores to consumers who have not been through an adverse credit-based decision?
Consumers are still in the dark regarding credit scores (how they’re built, what is a good score/bad score, who can see them and who can’t, what they can do to improve or maintain their scores). The FACS Act will clearly thrust credit scores into a spotlight they have never enjoyed before. Do you believe disclosure is the answer to empower consumers or do you believe more transparency/education about credit scoring is needed?
I always ask all my interviewees this question and it seems appropriate given the success you had with the FACS Act…do you know what your FICO credit scores are?
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