About real estate: Homeowners, others soon may qualify for free credit scores
A proposal in Congress would let consumers get a free copy of their credit score, just as they can order a "freebie" of their credit report today.
Q. You recently wrote that consumers can get a free copy of their credit report every year from each of the three big national credit bureaus. Do they have to give me a free copy of my overall credit score, too?
A. No — at least, not yet.
Many consumers don't understand the difference between a credit report and a credit score. A credit report includes information about your past and current creditors, your existing account balances and how well you have handled your debt over the past seven to 10 years. A score, on the other hand, is a number (usually between 300 and 850, with 850 being best) that summarizes all the info on your report.
Your credit-score number is designed to reflect the likelihood that you might become delinquent on a loan or credit obligation in the future. The most popular scoring system was created by California-based Fair Corp., which introduced its FICO system in the 1980s.
Mortgage lenders and other creditors almost always consider an applicant's FICO score when determining whether to make a home or auto loan, or to issue a credit card. Those with a FICO score of 760 or better are most likely to obtain credit at the lowest possible interest rate. Those near the lower end of the spectrum usually have to pay a higher rate, if they can get a loan at all.
Federal law requires national credit bureau giants Experian, TransUnion and Equifax to each provide one free copy of their reports each year to a consumer who requests it. The best way to order one is over the Internet at www.annualcreditreport.com, which is jointly run by the three companies, or by phoning the group toll-free at (877) 322-8228.
That same federal law, though, doesn't cover credit scores. Generally, you can get a "freebie" score from a lender only if you are denied credit or if you're charged a higher rate because your score is too low. Some private companies also offer "free" scores, but only if you agree to sign up for their expensive crediting-monitoring plans or related services that can cost more than $200 per year.
Fortunately, that policy could change as early as next year. That's because a proposed federal measure called the Free Access to Credit Scores Act recently was introduced in both houses of Congress by U.S. Sen. Bernie Sanders, an Independant from Vermont, and U.S. Rep. Steve Cohen, a Democrat from Tennessee.
The bill has already garnered support from other lawmakers. It's also supported by the nonprofit Consumers Union, publisher of the trusted Consumer Reports magazine, and other groups that 10 years ago helped push the law that now provides free credit reports.
Of course, there's no guarantee that the measure will be approved. Opposition to the bill is already gathering steam, led by various for-profit companies that make millions of dollars every year by selling the scores or the costly credit-monitoring plans.
Consumers Union is trying to build support for the bill by meeting with federal lawmakers on Capitol Hill. It's also urging homeowners and other folks to call the local office of their congressional representatives, or at least sign CU's online petition at consumersunion.com that essentially says consumers shouldn't have to pay for a credit score that is based on their own credit history.
Again, the fate of the bill sitting before Congress is unclear. If you want to know your credit score today, you'll have to pay for it. Assuming that you don't want to sign up for an expensive monthly plan, visit Fair Isaac's www.myfico.com and expect to pay $19.95. The company will take requests only over the Internet, so you'll have to ask a relative or trusted friend to order it if you don't have access to a computer.
REAL ESTATE TRIVIA: The "average" American has a credit score of about 640, FICO says.
Q. We are moving to a new city. My wife was molested by an older man when she was quite young, so we're obviously concerned about our twin 7-year-old daughters. How can we determine if there are any registered sex offenders in the area where we plan to purchase our next home?
A. Start by checking the Justice Department's National Sex Offender Public website, www.nsopw.gov. It's a free "clearing house" for information about convicted sex offenders in all 50 states, the District of Columbia and U.S. territories. You can type in the ZIP code of the community you have targeted to see if there are convicted predators there, or enter a specific address (if you have already picked out a property) and see a list of offenders living within a three-mile radius.
Also call the local police or sheriff's department in the new community, because some local law-enforcement agencies have more detailed data than the federal website provides.
• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers, P.O. Box 4405, Culver City, CA 90231-4405.
© 2012, Cowles Syndicate Inc.
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