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#2266427 - 02/16/22 03:28 AM Adverse Action Notice with no credit score
JoeG Offline
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DuPage county, IL
If an applicant was denied but has no credit score, is our credit decision based in part on information obtained in a report from the consumer reporting agency?

I think it does, so I think that the Adverse Action Letter we use should check have the box checked that starts with "Our credit decision was based in whole or in part on information obtained in a report from the consumer reporting agency listed below...." However, some employees don't agree and others simply don't know.

Anyone know the correct answer?

Thanks!

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Fair Lending
#2266429 - 02/16/22 11:44 AM Re: Adverse Action Notice with no credit score JoeG
rlcarey Offline
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rlcarey
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Galveston, TX
It is not really a chicken or the egg decision.

Q. How do you know the applicant has no credit score?

A. You looked at the credit report and it said, unable to score.

How did you not use the credit report?
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#2266436 - 02/16/22 02:18 PM Re: Adverse Action Notice with no credit score JoeG
Adam Witmer Offline
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I agree with Randy. You used the credit report and, therefore, need to check the box.
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2266446 - 02/16/22 03:09 PM Re: Adverse Action Notice with no credit score JoeG
JoeG Offline
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DuPage county, IL
One of our outside compliance companies that we regularly refer questions to just disagreed with us!
So, I am going to reach out to another compliance company for their opinion and reasoning.

Any one else care to share their opinion?

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#2266448 - 02/16/22 03:13 PM Re: Adverse Action Notice with no credit score JoeG
rlcarey Offline
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Galveston, TX
I surely hope you are not paying them much of a fee if they cannot answer such a simple and basic compliance question.

I will repeat - how do you know that the applicant has no credit score?
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#2266450 - 02/16/22 03:19 PM Re: Adverse Action Notice with no credit score JoeG
Rocky P Offline
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Florida
Joe, what was the reason for denial? I agree with Randy and Adam.
Only thing to "possibly" change my mind is if the credit report was automatically ordered, but the person applied for a loan that the bank does not make (i.e. geodome, log cabin, registered yacht), etc. and the bank denied the application for collateral without looking at or notating anything about the credit.
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#2266451 - 02/16/22 03:22 PM Re: Adverse Action Notice with no credit score JoeG
rlcarey Offline
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Galveston, TX
Well, Rocky has a good point. I assumed the application was denied because they lacked a credit score, but what were the actual reasons for denial used on the AAN?
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#2266452 - 02/16/22 03:23 PM Re: Adverse Action Notice with no credit score JoeG
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
If an applicant was denied but has no credit score

Why was the applicant denied? If they were denied in part due to the lack of a credit score then you most definitely relied in whole or in part on the credit report for the loan decision.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2266453 - 02/16/22 03:33 PM Re: Adverse Action Notice with no credit score JoeG
JoeG Offline
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DuPage county, IL
Hi Rocky. For this application, the credit score was one of the first items looked at on the credit report and the loan was for an unsecured loan, which we offer. These loans have credit insurance on them and our insurer requires a min. score and they will not insure a loan with no credit score.

The underwriter listed the reason for denial as "Other - no credit score" but no additional reasons like insufficient credit.

I appreciate the feedback.

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#2266459 - 02/16/22 04:01 PM Re: Adverse Action Notice with no credit score JoeG
Dan Persfull Offline
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Bloomington, IN
The underwriter listed the reason for denial as "Other - no credit score" but no additional reasons like insufficient credit.

Then you most definitely relied on information in the credit report. Anyone claiming they didn't needs retraining.

As Randy asked earlier, if you didn't use the credit report then how did you know there was no credit score?
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2266461 - 02/16/22 04:10 PM Re: Adverse Action Notice with no credit score JoeG
rlcarey Offline
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Galveston, TX
Are you sure that your other compliance resource was asked the correct question?

Were they asked if you needed to complete the following on the AAN, which would be required?

__Our credit decision was based in whole or in part on information obtained in a report from the consumer reporting agency listed below. You have a right under the Fair Credit Reporting Act to know the information contained in your credit file at the consumer reporting agency. The reporting agency played no part in .....................

And not this, which would not be required:

We also obtained your credit score from the consumer reporting agency and used it in making our credit decision. Your credit score is a number that reflects the information in your consumer report. Your credit score can change, depending on how the information in your consumer report changes.

Your credit score:____________________
Date:____________________
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#2266463 - 02/16/22 04:35 PM Re: Adverse Action Notice with no credit score JoeG
JoeG Offline
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DuPage county, IL
To clarify, our compliance source was asked if we needed to check the line in front of this paragraph when applications is denied for "Other-No Credit Score:"

__Our credit decision was based in whole or in part on information obtained in a report from the consumer reporting agency listed below. You have a right under the Fair Credit Reporting Act to know the information contained in your credit file at the consumer reporting agency. The reporting agency played no part in .....................

Also, we are going to check with compliance source #2 to see what they say and trying to get something in writing on this.

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#2266464 - 02/16/22 04:38 PM Re: Adverse Action Notice with no credit score JoeG
rlcarey Offline
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rlcarey
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Galveston, TX
Hint - get rid of your first source.
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#2266468 - 02/16/22 05:06 PM Re: Adverse Action Notice with no credit score JoeG
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
JoeG - review section 615 in the FCRA

https://www.bankersonline.com/regulations/fcra-615
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#2266470 - 02/16/22 05:23 PM Re: Adverse Action Notice with no credit score JoeG
JoeG Offline
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DuPage county, IL
Dan, thanks for the link! Always good to have documentation on hand.

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#2269146 - 04/14/22 09:10 PM Re: Adverse Action Notice with no credit score JoeG
dutchbltz Offline
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Question on this - we recently denied someone based on this. I included the FCRA section on the notice; but put 9002 in the section where the credit score goes; as that is the score returned by the bureau. Our auditor is saying this is incorrect; as 9002 is not really a score and may have been misleading to the customer. I do see his point; but what should I have put there instead then?

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#2269149 - 04/14/22 09:40 PM Re: Adverse Action Notice with no credit score JoeG
JoeG Offline
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Joined: Nov 2013
Posts: 127
DuPage county, IL
I believe that "9002" is the code that some credit reporting agencies use to indicate there is no credit score. I agree with the auditor that 9002 should not be used. Applicants don't even know what that means and might think there score is super high.

I would think that instead of using 9002, use "no score found" or something similar.

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