This week Congress will begin working to reconcile the differences between financial reform bills passed by the U.S. House of Representatives and the Senate. President Barack Obama has asked Congress for the final version by July 4.
As currently written, the Senate legislation has more provisions in it that could affect credit card use and access to credit scores. Here are some of the credit-related differences between the bills.
- Would establish an independent Consumer Financial Protection Agency, which could write and enforce rules that apply to certain financial products such as credit cards.
- Would create a consumer protection bureau within the Federal Reserve. Its rules could be vetoed by a council of bank regulators.
- Would limit the interchange fees banks and payment processors can charge for debit card transactions. Retailers would be able to offer discounts for using payment methods that cost less in interchange fees, and could set minimum purchase amounts for using plastic. These changes could make credit cards more expensive to use at the register than other forms of payment.
- Would require that consumers receive a free credit score whenever a lender or insurance company took an adverse action against them. "If you get turned down for credit, or receive a higher interest rate on a loan or unfavorable terms on a credit card, you will automatically receive a copy of your score, free of charge," says Sen. Mark Udall, D-Colo., who introduced the amendment. The adverse action letter would include the credit score actually used by the company to make the decision.
In some cases, people could even see credit scores they can't purchase as consumers, such as "industry-option" versions (tweaked to measure credit risk for specific loan products such as auto loans or bank credit cards), according to John Ulzheimer, president of consumer education at Credit.com. Currently, the Fair Credit Reporting Act gives you the right to a free credit report if a lender or insurer makes an adverse decision against you, but not a credit score.
What do you think of the free credit score provision in the Senate bill? Would you prefer access to a free credit score once a year, like federal law does with credit reports, or free access triggered by an adverse action?