Under new rules issued by the Federal Trade Commission and the Federal Reserve Board, lenders will be required to tell consumers why they’re sticking them with high rates or other lousy terms. How will creditors perform this incredible feat? By lying, of course. No, just kidding. They’re going to give you a free credit report and a note explaining their decision.
According to Bloomberg:
Consumers given less-favorable terms will be given a notice and the opportunity to get a free report, the Fed and the FTC said in a statement today. Lenders can also comply by giving customers a free credit score, which is usually available for a fee from credit-reporting companies.
Currently, lenders don’t have to explain why a borrower is getting particular terms. The rules will apply to all forms of consumer credit, including credit cards, auto loans, mortgages and student loans. The rules apply to banks and lenders such as auto dealers and financing firms. …
Notices will have to be sent when consumers are granted terms “materially less favorable” than “a substantial proportion” of the lenders’ other customers receive, according to the Federal Register.
Of course, this doesn’t mean you’re going to get a better deal. But it does give you an opportunity to review your credit report for errors and contest rates that you think might have been determined based on incorrect data.
Fed, FTC to Require Notices for Credit Decisions [Bloomberg.com]