I agree they are discussing FCRA. I would come up with a procedure that works mechanically and follows the FCRA and ECOA requirements as best as possible (you can share reasons but not scores, essentially). The discussion for this change does state that you can say "bankruptcy" and the non-bankrupt co-applicant should be able to understand that is not them.

I think they are drawing a line on just how personal you can get in a shared notice and decided a score was too personal.

Back to the credit score being on the report, how will you convince your examiner it isn't used? An examiner can assume if loans with low scores are denied, they're used. The examiner gets to define low. When is the last time you had a subjective area in Reg B or Fair Lending and just knew that if you explained this to your examiner, they'd understand and ignore what they saw? It ain't happening!

Now a question, what is the difference between pleading this case in your exit meeting, or alone in the middle of a forest?

Andy, for clarification: the rule states that Dodd-Frank requires disclosure "if a credit score was used in taking adverse action" and goes on to say "if the credit score was a factor in the adverse decision" the credit score should be disclosed. I'm thinking it would be non-compliant to include the credit score when the denial was based completely on, for example, insufficient collateral. Someone with an 800 credit score can get denied for insufficient collateral just like someone with a 500 credit score. You agree that in that case, the score should NOT be disclosed? (I know the scenarios presented in this thread have been about denying for reasons related to the credit score, but not the credit score itself, and i agree in those instances it still needs to be disclosed. Just wanting to see if you're in agreement about this.) Thanks.

I have to agree with you on this Andy, and state that this is not new. Way back in the 90s banks who were not scoring were having the score removed from credit reports so that they did not have to try to prove the score was not used. If the process was purely judgemental, we got rid of the score. It had no connection to our lending process.

Someone with an 800 credit score can get denied for insufficient collateral just like someone with a 500 credit score. You agree that in that case, the score should NOT be disclosed?

I agree with that statement.

Thanks Randy.

I agree as well. The score had nothing to do with the adverse action.

One of my common "findings" in review Adverse Action notices is when the FCRA box is checked even though the decline reason had nothing to do with the credit report - i.e. the appraised value was too low.

I didn't cite it a high risk finding, more of carelessness and the fact that the bank just entitled the consumer to receive a free copy of his/her report when they really weren't entitled, and the biggest risk was having the credit reporting agency take action because of that.

However now, more than ever, it will be important to ensure the correct box is, or is NOT, checked!

Why not just check "other" and state "co-applicants credit history" if you need to provide a denial to the other applicant whose credit had no weight on a credit decision. I believe something like that was suggested in the final rule. It's clear that only each individual whose credit history is entitled to a separate AAN with a credit disclosure.

Agreed. I see that very frequently. The box is automatically checked. And I see crazy comments added there.

With all the changes, I think the review process will be very important. Currently, I (Comliance Officer) review all adverse action notices before they are sent out. I have actually been able to correct those little mistakes, such as checking the FCRA box when not needed.

If you don't have a review process, I would recommend. If you do, make sure your reviewer is up to speed on all the changes relating to AANs.

Why not just check "other" and state "co-applicants credit history"....

Because that does not meet the specificity requirements of Regulation B. There is one credit application from a Regulation B standpoint, you have to tell the applicants (whether in one notice or two) the specific reasons for adverse action. You cannot say - sorry - you don't meet our credit standards.

Question about adverse action notice for a debit card in which we pulled a credit report. Do we use the new form and disclose the four items on the credit report? As I read the reg it only talks about credit denials.

So being as specific as to say the "co-applicant's credit history had weaknesses" is not enough? I guess I was just fixated on the following from the commentary:
3. Description of reasons. A creditor need not describe how or why a factor adversely affected an applicant. For example, the notice may say “length of residence” rather than “too short a period of residence.”

Just trying to rationalize that point, so I would be very appreciative if the holes in my logic were discussed in further detail. I know there will be questions on this point in the future..

I think credit history is too broad - you would not get away with that on a single applicant. It could be past due loans, collections, bankruptcy, lack of credit history, etc, etc. Also, you will not find such a broad statement included on the example AANs in Regulation B.

Statement of specific reasons. The statement of reasons for adverse action required by paragraph (a)(2)(i) of this section must be specific and indicate the principal reason(s) for the adverse action. Statements that the adverse action was based on the creditor's internal standards or policies or that the applicant, joint applicant, or similar party failed to achieve a qualifying score on the creditor's credit scoring system are insufficient.

I think it is too broad for the applicant themself, and yes in that situation the citation you are quoting would definitely apply. I think it is appropriate, given the citation I quoated, that it would be acceptable to quote that to a coapplicant.

But now thinking.....

I may be answering my own question here, but would appreciate a ratification if possible. If the primary applicant's credit history is the sole contributor to decision a denial, then would we not be required to provide just one AAN to just the primary applicant since Reg. B only requires one AAN on joint applicants?

So, it appears that in the case of a joint application the primary reasons for denial would be the same on both notices; however, each applicant would receive their own credit score disclsoure information.

"So, it appears that in the case of a joint application the primary reasons for denial would be the same on both notices; however, each applicant would receive their own credit score disclsoure information."

Only if both scores (or the factors that led to both scores) contributed to the denial.

I agree with Dolly - I think the reasons would be specific to each applicant, and on that note, you would only be required to provide both an AAN (with the new credit score disclosure) if both applicants credit history contributed the the adverse action.

Does this tool still apply today?

http://www.bankersonline.com/tools/bd_ecoa_fcrachart.pdf

I'm going to audit that tonight if possible.. I didn't realize BOL had that out there.

Please and thank you !^^^^ I'll print copies for my underwriters tomorrow.

Dan had chimed in on this subject in a similar thread.

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1581699#Post1581699

If you have a credit score included on your report, but it didn't adversely affect your credit decision (such as collateral, length of employment, etc) can you omit the section which discloses the credit score and factors? Or must you have it in the form, but leave it blank. That would seem confusing to a consumer?

can you omit the section which discloses the credit score and factors?

Yes - that language, if you read the model, is optional.