I need to re-visit a topic.

Under the FCRA, the definition of a "consumer report" is a credit report used in establishing the consumer's eligibility for credit or insurance to be used primarily for personal, family, or household purposes.

But the definition of "consumer" is "an individual."

If adverse action is taken with respect to a "consumer" (an individual), based on information in a "consumer report" (a report used to establish eligibility for credit for personal/family/household purposes), the bank has to provide credit score info (score, factors, etc).

So, if the applicant is an individual, but the "consumer report" is obtained to determine eligibility for business-purpose credit, must we provide the score info?

Presently, we do NOT include score info on business purpose denials when the applicant is an individual......wondering if we should be.

I assume you are referring to the Risk Based Pricing requirements and the Credit Score Exemption notice? If yes, then business credit is not covered, even if extended to an individual:


Subpart H—Duties of Users Regarding Risk-Based Pricing
§ 1022.70 Scope.
(a) Coverage.
(1) In general. This subpart applies to any person, except for a person excluded from coverage of this part by section 1029 of the Consumer Financial Protection Act of 2010, Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111–203, 124 Stat. 137, that both:

(i) Uses a consumer report in connection with an application for, or a grant, extension, or other provision of, credit to a consumer that is primarily for personal, family, or household purposes; and

(ii) Based in whole or in part on the consumer report, grants, extends, or otherwise provides credit to the consumer on material terms that are materially less favorable than the most favorable material terms available to a substantial proportion of consumers from or through that person.

(2) Business credit excluded. This subpart does not apply to an application for, or a grant, extension, or other provision of, credit to a consumer or to any other applicant primarily for a business purpose.

Manimal - She is referring to the adverse action notices.

I believe this is addressed in the FTC FCRA interpretations booklet.

This?

FCRA Booklet

I don't find the answer to my question there. I would think it would be at 615.

I don't think FCRA distinguishes between consumer and business credit (like Reg B does) for Adverse Action Notices.

Swiggles - well you have to read between the lines a little:

Such pertinent statements include:

Staff opined that (1) a report by a CRA is a “consumer report” even if it is used for commercial purposes; and (2) an application for business credit does not give rise to a permissible purpose except for a report on an individual who will be personally liable for the debt.

However, a report from a CRA on the personal credit of a consumer to a business credit grantor is a “consumer report” regardless of the purpose for which the information may in fact be used. Reports obtained from CRAs on consumers retain their character as “consumer reports” even if they are subsequently furnished in connection with a commercial credit or insurance transaction.

If the individuals are the applicants and not just guarantors, I would be providing the disclosures.

Thank you Manimal and Randy.

Ok. That is what I was intending to implement here. But I'm afraid of getting push-back. You know how commercial lenders are. They will not want to go to the trouble of adding the credit score info to denial letters for business loans made to individuals.

They won't want to give out the new appraisal disclosure either, but they need to come into the 21st century at some point.........

Good point!

Hi there - I have another question in line with this previous one....

In the instance a consumer report (credit score) was used to decline a Business purpose loan where the applicant is listed as the business - and the business loan application disclosed the "Right to Request Specific Reasons for Credit Denial" could the bank rely on the applicant to make a request or would the bank automatically have to provide an adverse action notice because the credit score was used - for the non-personal, non-family, non-household loan.