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Consumer Watchdog Opens for Business: What You Need to Know About Your FICO Score

Daily Ticker

The Consumer Financial Protection Bureau (CFPB) is set to open for business on Thursday and today President Obama will finally announce his intent to nominate a new head of the watchdog agency.

His pick: Not Elizabeth Warren, but Richard Cordray, who previously served as the Attorney General for the state of Ohio. The CFPB was Warren's creation from inception, but in the end, she proved to be too controversial a nominee to head up the bureau. (See: Taken to Task: President Obama Needs to Back Elizabeth Warren)

"American families and consumers bore the brunt of the financial crisis and are still struggling in its aftermath to find jobs, stay in their homes, and make ends meet. That is why I fought so hard to pass reforms to fix the financial system and put in place the strongest consumer protections in our nation's history," said President Obama in a White House press release. "Richard Cordray has spent his career advocating for middle class families, from his tenure as Ohio's Attorney General, to his most recent role as heading up the enforcement division at the CFPB and looking out for ordinary people in our financial system."

The roll out of CFBP means a lot of new changes for the financial services industry and consumers as a whole. Mark Greene, CEO of FICO, joined The Daily Ticker to discuss why it is more important than ever for consumers to know how to manage their FICO credit score.

"[Now] when lenders make certain kinds of decisions about consumers they have to explain those decision to consumers," says Greene. "In particular, if a consumer is turned down for a loan, like a credit card or if the loan is given under less-than most favorable terms like charging you a higher interest rate, [banks] have to explain it to you and they have to explain it in the form of a letter that will come to you at your home that sort of lays out the information they were using in reaching that decision."

These new disclosure rights empower consumers to challenge credit decisions made by issuers and manage their FICO credit scores to help produce better outcomes. In the accompanying interview Greene lays out these few tips on how to improve and maintain a good FICO score:

  • 1. Pay your bills on time.
  • 2. Don't open up more credit than you actually need.
  • 3. Don't depend too much on one form of credit. Use multiple sources.
  • 4. Create a long-standing history with credit issuers.

For more information on how to manage your FICO score, check out our interview with Greene earlier this year: How Your FICO Score is Calculated or visit myfico.com.