That's what I thought too, until the Federal Reserve Board said that the requirement also applied to non-lending products (see the quote in my last post)

Question, Qualifile creates their own "debit" score that relates to how the customer handled deposit accounts in the past along with certain ID risk factors. This does NOT include any portion of the persons "credit" score from the credit bureau.

since this is not a credit score, based on how they've handled credit in the past, would it be exempt from the score disclosures?

First, adverse action, as defined in the FCRA, is much broader than the denial of credit (603(k)(1)(b)(iv)). Using that argument, you would not have to provide the "Our decision was based in whole or in part based on...." for the denial of a deposit account based on a credit report (qualifile).

Maybe this "Senior Compliance Manager" should read the Federal Reserve's opinion which was found in the preamble to the Regulation B amendments that added the credit score disclosures to the model adverse action notices in Regulation B:

"Section 202.2(c) of the ECOA limits the definition of adverse action to decisions regarding credit. The FCRA, however, does not include such a limitation. See section 603(k)(1) of the FCRA. The FCRA therefore applies to adverse action decisions related to credit, but also decisions regarding, for example, a deposit account, insurance product, or employment. Although a credit score may generally be used in making or arranging loans, a credit score may also be used in taking adverse action not related to credit. The Board believes that a person would need to disclose a credit score obtained from a consumer reporting agency as part of the adverse action notice as set forth in section 1100F of the Dodd Frank Act, even if the person used the credit score to take adverse action for a non-lending product. In requiring credit score disclosures, section 1100F does not state that the credit score disclosures are only required for adverse action decisions related to credit."

I would need a little more than this person's opinion to go against the FRB as these attorneys are now at the CFPB.

P.S. Feel free to send this to them and see what they have to say.

Randy,

Qualifile offers many different types of products, only one of which includes the actual credit score from the credit bureau report.

Isn't there a difference between a credit score and a score that is based on the probability that the person is who they say they are and the way they've handled deposit accounts in the past? OR should we treat them all the same?

Okay, I agree that an actual credit score, as defined in both Reg. V and FCRA, if used to deny any product would need to be disclosed. However those definitions seem to indicate that only lending credit scores are the ones they are discussing.

From Reg. V – FACTA

\4\ ``Credit score'' is defined in the January 2010 Final Rule
in ------.71(l) to have the same meaning as in section 609(f)(2)(A)
of the FCRA, 15 U.S.C. 1681g(f)(2)(A). This is consistent with the
definition of ``numerical credit score'' in section 1100F of the
Dodd-Frank Act.

f) Disclosure of Credit Scores
(1) In general. Upon the request of a consumer for a credit score, a consumer reporting agency shall supply to the consumer a statement indicating that the information and credit scoring model may be different than the credit score that may be used by the lender, and a notice which shall include –
(2) Definitions. For purposes of this subsection, the following definitions shall apply:
(A) 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 decision.

They seem to be discussing scores that reflect on how the customer repays their lending obligations.

If there is a regulatory issuance that states that this definition now include how they've handled their deposit account (which isn't supposed to be a credit transaction), I would love to have a copy. Thank you.

Are you never going to allow an overdraft to be paid on a DDA? If you are then you are extending credit (a loan) under the FCRA.

From 1691a:

(d) The term "credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debts and defer its payment or to purchase property or services and defer payment therefor.


I'm not familiar with the Qualifile score but from what you stated it is a score that predicts how a consumer will handle their DDA account which one would then have to assume it predicts what the likelihood will be for you having to extend them credit (a loan) in the form of a paid overdraft.