The FACT Act of 2003: Notice and Request For Public Comment On the Effects of Credit Scores and Credit-Based Insurance Scores on the Availability and Affordability of Financial Products
While there may have been a rationale to justify credit scores in the beginning, the scoring models change frequently and seem to be misused by some credit grantors to justify higher interest rates than would otherwise be applied. Creditors misuse the reporting process, as well. A payment that is 2 days late, for instance, will be reported as 30 days late, skewing the credit scores to the detriment of the consumer. If credit scoring is to be allowed, it is my considered opinion that guidelines or legislation needs to be enacted to establish a uniform set of scoring models and a procedure established to permit consumer disputes directly challenging their scores. It has been my experience that scores are misused by credit grantors in the following manner: I recently applied for a mortgage and had to pay a "penalty" in the amount of 2% higher interest rates simply because of an inaccurate and obsolete derogatory entry on my credit report. Although I successfully challenged the inaccuracy, the lender still insisted on a higher interest rate for the mortgage due to the entry having once been on my report. The reason: FICO and BEACON scoring models still considered the old inaccuracy as derogatory while common sense would dictate that my scores should have increased. I am concerned about the widespread use of credit scoring for matters not related to credit, e.g., auto insurance. How my credit scores affect the likelihood of me having an accident is a subject apparently above my ability to understand. Again, I believe it is time for the FTC or other regulatory agency to take the lead in establishing at least a modicum of uniformity among the credit scoring models and the establishment of a system to permit consumers to directly challenge and dispute scores assigned to them. The consumer credit reporting agencies have erected so many bureaucratic barriers to disputing information with them that it is usually futile to even make the attempt.