Credit Scores–the Good, the Bad, and the Ugly

Credit Scores–an Important Change

Wednesday, the House approved the new financial regulatory bill that came out of conference last week. Assuming the Senate also votes it through, a whole new wave of credit card regulation should soon be taking effect.

The bill, of course, covers much more than just credit cards, and one small corner of it contains an important change concerning credit scores. If the legislation is passed, anyone who is turned down for any form of credit, or who receives a less attractive deal (for example, by being offered worse mortgage, loan, or credit card rates), because of a poor credit score should be able to legally demand to see that score.

In fact, there’s nothing to stop you from asking for your credit score even if a loan or credit card application is approved, and you like the deal you’ve been offered. The lender may not be legally obliged to provide it, but many may be happy to oblige.

Credit Reports and Scores–Why They’re Critical

Of course, someone’s credit score and report are likely to determine how good a deal (if any) that person can get on mortgages, loans, and credit cards. But they can be even more important than that.

Yesterday, an Oregon law came into force that stops employers in the state from using credit scores and reports as a factor in any decision to hire, suspend, demote, or fire an employee unless the company can show that the score is directly relevant to the job in question. The law addressed a nationwide problem–some employers routinely (and often unfairly) use credit histories as a way of filtering job applicants and punishing existing employees.

And the situation could become even more critical over here if the U.S. government picks up on an experiment that the British are currently undertaking. The U.K. government has, according to this morning’s Independent, asked a credit bureau to use credit histories to determine whether those in receipt of means-tested state benefits are living an appropriate lifestyle. So, for example, a person who receives housing benefits (has their rent paid) and also has a cable or satellite television subscription could be flagged as someone who may have more resources than they’re declaring, and might thus be cheating the system.

Problems with Credit Reports and Scores

Campaigners in the UK and consumer advocates over here point to the fact that all too many credit reports contain material inaccuracies. John Watts, of the Watts Law Group of Birmingham, AL, said last week that he has recently had several clients whose credit reports contained false information.

Mr. Watts, an attorney with a specialization in debt matters, advises that anyone in a similar position should immediately write to the credit reporting agency–copying the creditor that supplied the information–informing the creditor that the entry is wrong, and giving detailed, precise, and specific reasons in support of that assertion. He goes on:

And if they don’t treat you right? Well, then if you sue them they will be in a position where a judge and jury will be wondering why they mistreated you after you gave them detailed information to show that the company was wrong. In other words – after your precise warning/dispute/request to them.

Making the Most of Stellar Credit Scores

If you’ve been clever enough–or lucky enough–to have kept your credit score at the very top end of the scale, then you should take advantage of your privileged position. Many American Express charge cards and credit cards offer exceptionally good deals for those with exceptionally good credit reports.

And Simmons Bank similarly specializes in catering to the needs of the financially secure. The Simmons Bank Platinum Visa card, for example, currently has a 7.25% variable rate, no annual fee, no balance transfer fee, free travel accident coverage, and free car rental loss/damage waiver.

Low credit card rates are a hallmark of Simmons products, and the Simmons First Visa Platinum Travel Rewards card has a 9.25% variable rate. It has many of the same characteristics as the Platinum Visa card, but also has a credit card rewards program that offers one point a dollar. You can redeem points for free travel on all U.S. airlines.