If we pulled credit and received a credit score yet it was not used in our decision to decline the loan do we need to fill in credit score and factors on the Adverse Action Notice?

No.

If your reason for denial did not pertain to the information obatained in the credit report - such as insufficient collateral - then you do not include the credit bureau information on your AAN.

I thought so. We denied a loan because we could not verify income. However during a recent review, we were told that there would be no way for the bank to argue that the score was not also a factor if credit was pulled. They said best practice add it the the AAN.

There are two issues to consider with regard to your question.

The first is whether the FCRA section of the AAN would be required at all. If you denied a loan because you couldn't verify income and you did NOT use the credit report in making your credit decision, then you would not fill out any part of the FCRA section of the AAN (including the credit score section).

The second is whether you include the credit score IF you used the credit report in making your credit decision. The argument that I have heard, and agree with, is that if you DO use the credit report to make your credit decision, AND the credit score is provided with the credit report, then you would complete the FCRA section of the AAN and you would also include the credit score. The argument is that if you used the credit report and it had the score, how can you argue that the credit score was not used. It's better, in those cases where you actually used the credit report, to disclose the credit score.

I disagree strongly. So if i pull a credit report and the applicant has an 820 score, yet i deny because of collateral value, i'm supposed to go ahead and disclose the score (and thereby indicate that information in the credit report helped lead to the denial)?

Raitchjay, I agree with you if the suggestion is that no matter what, if a credit report was pulled the FCRA disclosure should be disclosed no matter what. It is crystal clear IMO that you do not automatically provide the FCRA disclosure just because credit was pulled - you must actually USE the report.

But if you do use the report AND the report contained the credit score, you should complete the FCRA section of the AAN and include the credit score disclosure.

I agree 100%. That just doesn't sound like what dac's auditors are saying.