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#431760 - 09/30/05 01:16 PM Pre-Qualification and Credit Score Disclosure
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
We have a pre-qualification program under which we are very careful to provide a notice of adverse action in those circumstances where the pre-qual becomes an application under Reg B, i.e. when we have enough information to convey to the consumer that we would not be able to grant him/her a mortgage.

Up to the point of saying "no", the pre-qual does not meet the definition of an "application" and therefore I do not feel would require a Credit Score Disclosure under the FACT Act.

However, once we say no and send a declination notice I am inclined to feel that we need to accompany the declination with the Credit Score Disclosure (assuming a credit report was pulled....).

I searched previous threads but did not really find one that addresses this. Any comments or thoughts would be appreciated.

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#431761 - 09/30/05 04:35 PM Re: Pre-Qualification and Credit Score Disclosure
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,762
Bloomington, IN
This is a tough one to answer definitively. The FCRA/FACT Act does not define an application, or at least I have not found where it has.

g) Disclosure of credit scores by certain mortgage lenders

(1) In general

Any person who makes or arranges loans and who uses a consumer credit score, as defined in subsection (f) of this section, in connection with an application initiated or sought by a consumer for a closed end loan or the establishment of an open end loan . . .


Would a pre-qualification request/application be an application for a closed end loan - IMO yes. It just wouldn't be one for notification requirements under Reg. B unless it resulted in a denial. Also, are you using the credit score in relation to the pre-qualification "application"?

To make a long answer longer, - IMO you should provide the notice. However I will admit this opinion is based on my personal intrepretation.
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The opinions expressed are mine and they are not to be taken as legal advice.

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