Beginning on July 21, consumers who are rejected by lenders for new lines of credit, such as a credit card or home loan, based on their credit score will be allowed to find out why, according to a report from CBS News. When consumers are denied, the financial institution will have to provide them with a free copy of the credit score it used to determine their ineligibility. Previously these reports would have cost consumers a small amount of money to view.
[Consumer Resource: Tips to Improve and Rebuild Your Credit]
This rule is also being extended to cover all consumers who are granted the line of credit but given interest rates that are less than ideal, the report said. In addition, the lender will have to explain what portion of the consumers’ credit history was weighing down their rating.
The large majority of a consumer’s credit score is made up of the payment history and the amount of available credit being used across all accounts. Altogether, these two factors alone make up 65 percent of a total rating. As a consequence, it is of the utmost importance to keep credit card spending under control and make regular on-time payments.
Image by cannonsnapper, via Flickr