Do you provide a score, contained in a Chex Systems report, in an adverse
action notice for deposit accounts?
I'm working on our deposit audit and am confused by the definition of a
credit score. Section 615 of FCRA refers you to 609 (f)(2)(A) for this
(A) CREDIT SCORE.--The term "credit score"--
(i) means a numerical value or a categorization derived from a statistical
tool or modeling system used by a person who makes or arranges a loan to
predict the likelihood of certain credit behaviors, including default (and
the numerical value or the categorization derived from such analysis may also
be referred to as a "risk predictor" or "risk score"); and
(ii) does not include--
(I) any mortgage score or rating of an automated underwriting system that
considers one or more factors in addition to credit information, including
the loan to value ratio, the amount of down payment, or the financial assets
of a consumer; or
(II) any other elements of the underwriting process or underwriting
FCRA, Credit Score, Credit report
If a borrower was denied credit for insufficient income (non credit score related),
does the credit /score disclosure need to be included with the denial letter?
We have indirect dealers that will send contracts to us to buy. In the packet, we have them include proof that they provided a credit score disclosure to their applicant. Can you tell where in Regulation V this shows as a requirement for this type of verification or validation.
Normally we do not use credit score when determining rates or approvals. However, we are offering a promotion and want to base the rate on their credit score for this promo only and no other loans. Are there any discriminative factors in doing so as long as we apply the same procedure fairly to each applicant that applies.
Is the second review of declined mortgage loans a regulatory requirement or a Fair Lending best practice? If required, what regulation? Would the review be applicable to loans auto-declined by a credit scoring system?
It is talked about in many contexts. It is a term tossed about without clear definition. It engenders fear and caution among lenders. It raises compliance concerns.
The OCC has released a study on credit scoring. While the conclusions of the study are not new, the study does raise ideas for improving the effectiveness of credit scoring.
The FTC has solicited comments on its study of the effect of credit scores on the availability of insurance and credit products.
Would the Fannie Mae and/or Freddie Mac Desktop Underwriting and Loan Prospector systems be considered credit scoring systems for the purpose of Reg B? In particular, would these systems be subject to the Reg B “gray band” requirements as outlined in the Fed’s most recent staff interpretations?
OCC has scheduled a conference on credit rating and scoring models. The conference will feature economists, statisticians and practitioners in the field of credit scoring.