The feds just expanded the pool of people likely to see their scores. Initially, the Dodd-Frank financial reform law requiring credit score disclosure was assumed to apply only to people who were either turned down for credit or who didn’t receive the best rate and terms. Now, according to final rules released yesterday by the Federal Reserve and Federal Trade Commission, anyone who applies for credit after the July 21 implementation date is likely to see their scores, said John Ulzheimer, author of “You’re Nothing But a Number” and a credit expert who offered advice to U.S. Senator Mark Udall, who drafted the credit score provision.

There are a few narrow exceptions allowing lenders not to disclose the scores, but Ulzheimer believes that for simplicity and compliance many banks will default to always disclosing a score.

“It’s awesome,” he said. “The vast majority of consumers who apply for anything in the financial services arena are going to see their score, even if you’re approved for the best rate and terms.”

There’s a lot of confusion about credit scores. Many people erroneously assume they have the annual right to see their scores for free, which isn’t true (you have a right to see your three credit reports, not your scores, via www.annualcreditreport.com). The only scores you have a right to see are the ones your mortgage lender uses to grant or deny you a home loan; that’s been true since 2004. Otherwise, though, you typically haven’t had free access to your scores.

People also believe that the scores they buy from the credit bureaus or get for free from various Web sites are the same scores lenders use; typically, that’s not the case. To see two of your three available FICO scores, you’ve had to buy them from MyFico.com at $19.95 a pop. (The third credit bureau, Experian, no longer sells FICO scores to consumers, although it continues to sell them to lenders.)

The new disclosure rules do not, unfortunately, extend to insurance companies as originally expected. Insurance companies use insurance scores, rather than credit scores, to determine premiums. Insurance scores use credit bureau data, just as credit scores do, but the feds decided insurance scores were different enough in form and function not to qualify for the new disclosures.

Still, this is great news for consumers, and yet another step in lifting the veil of mystery that’s surrounded credit scoring for too long.

photo credit: bhamsandwich

The answer is: the dead person’s estate. But many family members mourning the loss of a loved one complain they’ve been harassed by aggressive collection agents who often say the mourners have a “moral” or even a legal duty to pay the bills.

The New York Times wrote about these collections, and the Federal Trade Commission has responded with a consumer alert clarifying the issue. An excerpt:

Who is responsible for paying the debts of a relative who has died?
Generally, someone’s estate is responsible for paying their debts. But if there isn’t enough in the estate to cover the debts, they typically go unpaid.

Am I legally obligated to pay the debts of a deceased relative?
You usually don’t have a legal obligation to pay the debts of a deceased relative who was not your spouse. Even a spouse’s obligation to pay may be limited under state probate law. To determine whether you’re legally obligated to pay, talk to an attorney who is knowledgeable about this area of the law.

What should I do if a debt collector contacts me about a debt of a relative who has died?
Give the debt collector the contact information of the decedent’s personal representative. That’s the person responsible for settling their affairs, including paying any outstanding debts from the estate. If there is a will, the personal representative is known as the executor; if there is no will, the personal representative is known as the administrator. Don’t give any of your personal information, like your Social Security number, birth date, or financial account numbers to anyone unless you know who you’re dealing with. Some con artists may check obituaries and other legal notices, and then contact relatives of a deceased posing as debt collectors. These scam artists can use your personal information to help them commit identity theft or other types of fraud.

For more, you can read the FTC’s alert by CLICKING HERE.

For example, the FTC wants to restrict debt collectors from calling cell phones and sending text messages to consumers without prior consent, noting that such communication often costs the receiver money.

But creditors are likely to respond to such a change with boilerplate agreements that force the consumer to agree to such contact if they want credit, thus allowing collectors to continue to use up minutes and text allotments.

Other changes to the Fair Debt Collection Practices Act that the FTC proposed include:

• Increasing the amount consumers can collect from collection agencies for FDCPA violations. (The amount, $1,000, has been unchanged since the Act was passed in 1977. The same amount would be about $3,600 in 2008 dollars.)
• Requiring debt collectors to provide better information to consumers about the name of the original creditor as well as a full account of the total principal/interest/fees and other charges that make up the debt.
• Granting the FTC regulatory authority to issue rules under the FDCPA
• Requiring collectors to better explain consumer rights under the FDCPA. For example, if a consumer sends a timely written dispute or request for verification, the debt collector must stop collection efforts until it has offered the verification in writing/

These changes are long overdue. But what we really need is beefed up enforcement to make sure fair debt collection laws aren’t a joke. It’s still too easy for collection agencies to flout the law and for rogue collectors to skip from one agency to another.

To read the entire report CLICK HERE.

Here are some of my related columns on debt collectors:

• Don’t ignore that debt collector

• ‘Zombie’ debt is hard to kill

• Sleazy new debt-collector tactics