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#1677279 - 03/14/12 01:46 PM Score on AANs and the credit score disclosure
Many Hats Offline
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Orlando, FL
Just trying to confirm whether a credit score disclosure is required for the following:

-consumer purpose loan to purchase musical equipment
-turned down for limited credit experience and excessive obligations in relation to income
-date of AAN is October 2011

My understanding is that since the decision was made in whole or part based on information in a credit report, the score needs to be on the AAN along with the factors, range of scores, etc. AND, it's also my understanding that the applicant should be provided with the credit score disclosure document (the one that shows the score, how it compares to national averages, etc.).

Is my understanding correct?

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#1677312 - 03/14/12 02:14 PM Re: Score on AANs and the credit score disclosure Many Hats
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
The RBPN or the Exception notices are not required when an AAN is provided. See 1022.74.

I have to assume the limited credit experience was considered in addition to the credit score obtained in the CR. I would have to opine the score was a factor and would be disclosed on the AAN.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1677474 - 03/14/12 04:34 PM Re: Score on AANs and the credit score disclosure Many Hats
Many Hats Offline
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Orlando, FL
So in this case the "Your Score and the Price you Pay for it" disclosure would not be required, but the score would need to be on the AAN?

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#1679587 - 03/20/12 01:05 PM Re: Score on AANs and the credit score disclosure Many Hats
Many Hats Offline
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Orlando, FL
Ok...I have another question about the "Your Score and the Price you Pay for it" disclosure.

Are there any exceptions (other than it is not required when an AAN is provided and for business purpose credit)?

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#1679594 - 03/20/12 01:25 PM Re: Score on AANs and the credit score disclosure Many Hats
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Reg. V - 1022.74 gives examples of exceptions to the rule.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1679639 - 03/20/12 02:12 PM Re: Score on AANs and the credit score disclosure Many Hats
SUSANE1 Offline
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I am thinking the entire "saga" of do you or don't you disclose or do I use the form but not check the box or do I not use the form at all and on and on and on >>>> this is about the most confusing rule out there right now. Ripe for the examination tear apart.

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#1679662 - 03/20/12 02:38 PM Re: Score on AANs and the credit score disclosure Many Hats
Many Hats Offline
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Orlando, FL
Agreed.

I have a scenario where the bank uses the information in a credit report for non real estate secured consumer loans, but does not have a minimum score requirement, so the score in and of itself is not used. Also, the bank does not utilize risk-based pricing. The bank has not been providing the disclosure at all.

The way I read Reg V, the bottom line is, for originated non real estate scured loans, the bank is required to provide the "Your Score and the Price you Pay for it" disclosure to comply with FCRA.

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#1679706 - 03/20/12 03:16 PM Re: Score on AANs and the credit score disclosure Many Hats
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
The RBP and Exception notice requirements have nothing to do with the AAN credit score disclosure requirements.

1022.72 will answer the question when a RBPN or exception notice is required. If you don't use risk based pricing then the notices do not apply.

However, if the loan is for a consumer purpose and will be secured by 1-4 real property you must make the disclosures required by section 609(g) of the FCRA.

The question whether to disclose a credit score on the AAN can be answered on page 41592 of the following document.

http://www.gpo.gov/fdsys/pkg/FR-2011-07-15/pdf/2011-17585.pdf
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1679755 - 03/20/12 03:56 PM Re: Score on AANs and the credit score disclosure Many Hats
SUSANE1 Offline
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Your comment - if you don't use risk based pricing - we have a minumun credit score to attain and then the pricing is from a prescribed rate sheet - no exceptions on the rate sheet - would you call this risk based pricing?
Lastly, - did any banks choose to offer the RBP notices? I thought everyone would go with the exception notice for ease of use. ???

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#1679852 - 03/20/12 05:39 PM Re: Score on AANs and the credit score disclosure Many Hats
Many Hats Offline
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Orlando, FL
Originally Posted By: Many Hats
... but does not have a minimum score requirement


Correction...I just learned that there actually is a minimum credit score requirement. The loan may still be approved if it does not meet the minimum score requirement and will have the SAME pricing as other borrowers.

So, with this information, the bank does not use risk-based pricing, but does USE the score. So, would they need to provide the credit score disclosure for originated loans?

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#1679876 - 03/20/12 06:16 PM Re: Score on AANs and the credit score disclosure Many Hats
Dan Persfull Offline
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Dan Persfull
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Posts: 46,635
Bloomington, IN
Anything approved below the minimum score would be, or should be, treated as an exception to policy with the proper approval process for exceptions.

Those below the minimum score that are not approved then the score was used in whole or in part in the adverse decision and it would have to be disclosed on the AAN. I don't think you could successfully argue otherwise since you do indeed have a minimum score to qualify and that score is used in conjunction with other information in approving as an exception or denying the request.

Since they have the same pricing regardless then risk based pricing is not an issue and the RBPN or Exception notice would not be required.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1680020 - 03/20/12 08:45 PM Re: Score on AANs and the credit score disclosure Many Hats
SUSANE1 Offline
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oh no !! Now I am completly confused..... so since we use rate sheet and don't deviate, then our exception notice is not needed. What is we give the notice anyway, i think it is good information for the consumer! ???

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