Congress Seems Poised to Make Credit Reporting Rules Permanent.

The House Financial Services Committee has approved a bill that permanently extends the Fair Credit Reporting Act and requires lenders to disclose credit scores to mortgage applicants.

The committee approved the bill by a 61-3 vote and committee chairman Michael Oxley, R-Ohio, hailed it as a major achievement.

"This landmark legislation strikes the proper balance between consumers' access to vibrant credit markets and the protections they need to fight identity theft and ensure the accuracy of their credit reports," Rep. Oxley said.

To the great relief of the financial services industry, the bill (H.R. 2622), sponsored by Rep. Spencer Bachus, R-Ala., and Rep. Darlene Hooley, D-Ore., permanently bans the states from interfering with federal standards on consumer credit reporting.

However, the bill also includes an amendment, offered by Rep. Bernie Sanders, I-Vt., that requires mortgage originators to disclose the credit score they used in connection with an application - along with the reason codes. Reason codes explain whether a delinquency or too many open lines of credit, for example, affected the credit score.

The Sanders amendment is based on a California law and it is understood that the lender only has to provide general explanation of the credit score. If the prospective borrower wants a more detailed explanation, the lender can refer the applicant to the credit bureau.

But the Mortgage Bankers Association believes it would be much more burdensome and lenders would have to provide more credit counseling to keep customers happy.