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We are having a debate regarding FCRA and more specifically, denoting credit scores on the FCRA notice when credit information contained within the consumer report was used in rendering a decision vs. a declination resulting from a credit score not meeting the Bank’s credit underwriting guidelines. In reviewing the 2011 Rule and preamble, there appears to be some ambiguity.
Can you provide insight as to whether a credit score should be included on FCRA notices whenever a bank is using information contained within a consumer report vs. when a credit score is explicitly used in rendering the credit decision?
Under section 1100F of the Dodd-Frank Act, a person is not required to disclose a credit score and related information if a credit score is not used in taking the adverse action. (Note, if this is the case it must be clearly apparent/documented in the file that the score did not contribute to the denial in any way. – e.g. excellent score, but perhaps collateral is insufficient. Otherwise, it will be difficult to make a case that a credit score was not used as part of adverse action.)
A creditor that obtains a credit score and takes adverse action is required to disclose that score, unless the credit score played no role in the adverse action determination. (Again, the file should clearly show how the credit score did not affect the decision.)
If the credit score was a factor in the adverse action decision, even if it was not a significant factor, the creditor will have used the credit score for purposes of section 1100F of the Dodd-Frank Act. Therefore, if the score in any way contributes to the deicision it must be included.
From the FTC’s “Forty Years of with the FCRA“:
Section 615(a) provides that any party who “takes any adverse action with
respect to any consumer that is based in whole or in part on any information
contained in a consumer report” shall provide to the consumer orally, in writing,
or electronically: notice of the adverse action; the name, address, and telephone
number of the CRA (toll-free telephone number, in the case of a nationwide
CRA); a statement that the CRA “did not make the decision to take the adverse
action” and is unable to provide specific reasons for the action; and notice of the
consumer’s right to obtain a free file disclosure from the CRA, and to dispute with
a CRA the accuracy or completeness of any information in a consumer report
furnished by the CRA. Effective July 21, 2011, the party taking the adverse action
must also disclose any numerical credit score that contributed to the adverse
action, along with certain related information.
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