I thought I read somewhere that you could use as a reason that someone's credit score is below your bank's limit on an adverse action. Try as I might, I can't figure out where I read it and am beginning to wonder if I imagined it. Can anyone help a frazzled compliance officer out? Thanks in advance.

You can deny a loan for a credit score below an acceptable level, however you have to give the factors that caused the score to be unsatisfactory. You can't just use the term "credit score below our acceptable minimum".

And as Rlcarey frequently points out you need some statistical information why a specific minimum credit score is the determining factor. IOWs can you statistically show problem loans in your portfolio where scores were at or below the set minimum. Denying a loan strictly on the bases of a score is not a good idea. You should take into consideration the factors that contributed to that score.

Thanks, Dan.

I agree that the policy is bad, but our new CEO is determined we make no loans to anyone with a credit score lower than our arbitrary cutoff.

That's OK, but you'll need to tell them why the score is low. You can't say "score is too low" or "score is below our cutoff".