The Tennessee Democrat wants consumers to get a free copy of their scores each year by asking for them, not just when they’re turned down for credit or receive a higher interest rate or unfavorable terms on loans as is provided by last year’s Dodd-Frank Wall Street reform law.
Cohen said a good credit score means better interest rates on mortgages, bank loans and credit cards. The bill also calls for a Government Accountability Office study on how little-known bankruptcy-risk scores are determined.
Jean Braucher, resident scholar at the American Bankruptcy Institute and a law professor on leave from the University of Arizona, said knowing a credit score might prompt a consumer with a low one to make efforts to improve it before applying for more credit. She said it may also be true that asking for a credit score will adversely affect that score but, because the information is proprietary, that can’t be determined. Right now, consumers pay for credit scores from the three credit-reporting agencies.
Linda L. Tucker, director of education and marketing with the Family Service Agency Inc. of North Little Rock, Ark., which has three satellite offices in Memphis and one in Southaven, said knowing a credit score probably won’t affect behavior for most people.
“It’s not going to make a bit of difference,” she said.
Memphis bankruptcy lawyer Jimmy E. McElroy said he doubts most people know their credit scores and admitted he didn’t know his.
“I’d be in favor of anything that would help the consumer determine their risk or whether or not they’re getting into a position where they can’t afford to take on this new debt or buy this house or this car,” McElroy said.
“It’s real easy to find out a credit score,” he added. “You just try to buy something on credit and they’ll tell you real fast.”
The legislation introduced Thursday follows Cohen’s reintroduction of a bill last month that would limit the use of credit checks in employment screening. Cohen points out that the Equal Employment Opportunity Commission has suggested that the use of credit checks to screen job applicants may disproportionately affect women and minorities.
He also noted that the use of credit checks is increasing to the point that 43 percent of employers now use them. Federal law requires that employers get the permission of prospective employees before seeking credit information but consumer advocates say few job seekers feel comfortable saying no to the request.