Starting January 1st, 2011 if you apply for a loan or a credit card, and credit is extended but on less favorable terms than to other consumers, the issuer must now notify you of this fact. It used to be you would only have been notified under these conditions if you were financing your home.

Yep, believe it or not, new laws have been written to help the consumer when it comes to personal finances, (can you believe that???) and this is one of them. In case you're ever stopped in a dark alley with a gun to your back and the person holding you up is asking the name of the law, it's called the "risk-based pricing" rule under the Fair and Accurate Credit Transactions Act of 2003. Under this law consumers have the right to find out why they didn't receive the best possible terms. The consumer will either receive a risk-based pricing notice or their credit score and how the consumer's credit score compares to those that received a lower interest rate.

This is a benefit (although it won't seem so great when you've been turned down for credit) because you normally have to pay a fee of around $15 in order to receive your credit score.

If you've been notified you're paying a higher interest rate, you might want to consider getting a copy of your credit report. You can receive a free report once a year from each of the three credit bureaus: Experian, Equifax and Trans Union. Check the report for any errors, as incorrect derogatory information can be removed from your report by notifying the bureau with an explanation. (It's up to you and your conscious to have any incorrect positive information removed.) It may take a few weeks to get the information removed from your report, but it will help you get a better rate the next time you apply for credit.

Now you'll know if you're paying a higher interest rate on your loan or credit card, and why. When was the last time you knew why you were at a disadvantage?


CategoriesCredit & Debt