Buyers Rejected For Loan Can Find Out Why

A provision in the Dodd-Frank financial reform law, which took effect in July, is requiring lenders to provide consumers with free credit score, which will help provide new insights into why they may have been rejected for a loan or did not qualify for the best lowest rate. While borrowers can access their credit scores from the credit bureaus, the credit scores that a lender uses isn't always the same one that the credit bureau provides you. According to a report by the Consumer Financial Protection Bureau, some credit bureaus sell consumers “educational” scores that aren't the same ones used by lenders or these bureaus may base the score on a different model than the one lenders use. Now, borrowers for the first time will get a more accurate view of what credit score lenders are using to base their mortgage on. Under the new provision, lenders will be required to provide potential borrowers with a free credit score whenever the reject an application for a loan. Lenders must provide borrowers with an “adverse action” notice, which will include their credit scores as well as an explanation of why they were rejected for a loan. Lenders will also be required to provide a free credit score and an explanation whenever they approve a loan but a higher rate than what is given to their best customers. Mark Greene, CEO of FICO, says that many borrowers may be surprised to learn that they didn’t qualify for a lender’s lowest rate when applying for a loan. This informative article brought to you courtesy of Old Republic National Title Insurance