Reports of credit scores will soon be mandatory for potential homeowners shopping for a mortgage and comparing rates and terms, according to a recent Washington Post report.
Beginning Jan. 1 next year, mortgage lenders will be required to give potential loan customers an alert on their credit scores plus other information that might help them choose between different lenders.
Financial institutions can disclose the information in several ways, but it will likely include details of where a consumer's credit score ranks among all applicants, reasons why a score was lowered, and a reminder of where errors can be reported.
The new rules on credit score alerts, passed by the Congress after being debated and mulled over since 2003, will make it easier for prospective homeowners to compare their offers and understand why they receive particular rates and terms.
According to BankRate.com, a borrower with a credit score in the highest FICO tier—760 or higher—will receive lower mortgage rates of an average of four percentage points (5.78 percent versus 9.49 percent), which could mean a difference of tens of thousands of dollars over the course of a 15- or 30-year mortgage.
In recent years, due to the economic downturn, mortgage lenders have increasingly hiked their credit standards, as Americans as a whole, have seen their credit scores hacked by joblessness, foreclosures, and delinquencies.
