New FICO site - Risk-Based Pricing Rule and credit education
FICO launched ScoreInfo.org in response to the Fair Credit Reporting Act most recent amendments, which now require lenders to send a Risk-Based Pricing Disclosure Notice if a lending decision based on a your credit, results in less favorable credit terms and further requirements, such as a higher interest rate or larger down payment. Something similar to the Statement of Credit Denial that we briefly touched in Can lender approve previously declined application? but not quite that lethal.
The ScoreInfo in itself is quite useful for your credit education. This is a free informational website that provides very comprehensive information about the new Risk-Based Pricing Rule, as well as federally-mandated Credit Score Disclosure Notice and Adverse Action Notice, but most importantly, explains several key details about FICO score and how they are used by the lending institutions in formulating the criteria and parameters of risk based loans.
You can also try FICO Score Estimator which will gives free estimated FICO Score range once you answer ten questions. I went through the Estimator and it gave me quite an estimate - between 620 and 720. Last time I had my real credit scores in December, and nothing much changed since except a little better debt utilization rate, they were
Equifax/Facta Beacon 5.0 - 697
TransUnion/FICO Classic (04) - 688
Experian/FAIR ISAAC (VER. 2) - 663
So you may say that the estimator is pretty accurate, albeit the range is quite wide. But going back to Risk-Based Pricing Rule.
Risk-based pricing basically helps lenders to set the terms of a loan, such as interest rate, down payment or credit limit, according to your credit risk. Lenders using risk-based pricing, generally offer more favorable terms to consumers with credit histories that reflect lower risk and less favorable terms to those with higher risk.
The other important change the new FCRA regulation brought is the ability of recipients of the Risk-Based Pricing Disclosure Notice to receive a free copy of their credit report. Previosly, you can only get a free credit report if you application was flatly denied. With this new regulation, you can get it, even when approved but under less favorable terms. Remember to request a free copy of the credit report within 60 days of receiving the notice. Credit scores are not included. See also
Free Experian credit report and score
Free Equifax credit report and score
Free TransUnion credit report and score
Wed Mar 2, 2011 09:03AM | Copyright: www.bad-credit-advisor.com | More in Credit Score Help | Comments (0)
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