Federal Reserve says credit scores must be revealed if applications are denied

New credit rules released by the Federal Reserve Board require lenders to be more transparent to potential borrowers.

An extension of the Fair Credit Reporting Act, the new rules require lenders — such as banks and credit card companies — to reveal any credit score to consumers if it was part of the decisioning process.

The law still requires credit bureaus to show a borrower their credit report for free as well if the rejecting creditor used that as a reason for denying a loan or providing less favorable terms.

These same disclosure requirements do not apply to borrowers who are approved, although some lenders may do so anyway.

In this regard, a recent Reuters wire report reminded borrowers that receiving an application score doesn't necessarily indicate that they have bad credit. Nessa Feddis of the American Bankers Association told the news service that some lenders may opt to send out borrowers' credit scores to all applicants in order to satisfy the requirement.

Should lenders decide to comply this way, this can also serve as an avenue to check the accuracy of one's credit score. A credit lawyer can help borrowers identify inaccuracies on their report, thereby avoiding having to file a credit dispute.