If you deny a loan and the credit score is not the reason for denial, do you still have to include the credit score on the adverse action notice?

If information from the credit report (not just the score itself) was not used as a reason for the denial, the credit score should not be included on the AAN.

Raitchjay, just want to clarify. Even if the score is not used in denying the loan, as long as something on the credit report was used, we have to dislcose the credit score? Or just the credit reporting agency information?

Manimal....that's how i've interpreted it and how we do it, yes. For example, if we deny for "excessive obligations in relation to income" and we used the credit report to determine the obligations, we will disclose the score, even though we don't have a litmus test for credit score per se.

Thanks for the clarification. We don't use the score at all, so we don't dislcose it on the Adverse Action. Just interesting to hear what others are doing and their reasons for doing so. Thanks for responding.

There have been several threads on this issue. The (general) concensus appeared to be:

- If you have a score cutoff and the score is below that, include the credit score disclosure.
- If you never use the score but have it, consider not getting the score any more because you could have a difficult time explaining that a viewable score of 502 reaalllly didn't have ANY impact on the decision.
- If you don't have a policy on how to use the score and decline for information on the report, include the credit score.

If your underwriting policy clealy includes how to use the score, you're on firmer ground. If the policy is silent and you have the score, the assumption is (reasonable or not) when declining for information on a credit report, the score would impact the decision.

My two cents.

How would you handle this situation:
Mortgage appication for a specific loan program that has 620 minimum credit score.
Credit report pulled, no derogatory credit, but score below mimimum. Question is on Adverse notice......
Reason on adverse is "below required minimum credit score for that program"..........Is that sufficient?
Thanks

(2) 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.

You have to tell them why they scored low.

We listed the factors from the credit report......will that not work?

Those would work as those specific reasons caused the score to be below the minimum.

Great! Thanks!!