From auto loans to credit cards, a person’s credit report can have an effect in their ability to get approved for funds, though a recent government action could help consumers when it comes to knowing why they may have lost out on better offers.

New rules from the Federal Reserve Board and the Federal Trade Commission were recently finalized and will take effect January 1, 2011. Through the new rules, lenders will generally have to tell consumers when a credit report caused the financial institution to give a person terms that are less favorable on loans through a practice known as “risk-based pricing.”

In order to help themselves, consumers can obtain a free copy of their credit report, which they should scan for inaccuracies. Mistakes could include bills being listed as having late payments even though the consumer kept the account in good standing.

Another option for lenders through the new rules is to provide consumers with a free copy of their credit score along with information that explains it.

“Today, most consumers must pay a fee to obtain their credit score,” the Fed noted.

A person’s credit score has become more important than ever, especially with the economy dealing with tight credit markets and an increase in delinquencies and defaults. Many lenders are being more careful when it comes to whom they lend money as they try to reduce risk and find stability.

And though getting loans may be more difficult now than in days past, there are things consumers can do to make sure they maintain a good credit score. For example, people should make sure they pay their bills on time every time. Furthermore, consumers should make sure they keep utilization ratios on credit card debt to below 30 percent of their available balance.

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Consumers may be alerted to when their credit report leads to harder loan terms.


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