Hello,

I want to make sure I understand the following guidance correctly. If we pull all three credit bureaus, but only use the middle score in determining creditworthiness, do we only have to disclose that score on the adverse action?

Multiple credit scores.28 In certain cases, a person may receive multiple credit scores from consumer reporting agencies. If the person only uses one credit score in making the decision, that particular score and related information for that specific credit score must be disclosed. If the person uses multiple credit scores in making the credit decision, only one of the scores is required to be disclosed; however, the FCRA does not prohibit creditors from disclosing multiple credit scores to the consumer.

Thank you,

Yes. You would disclose the middle score as that is what you used in your credit decision. From the preamble to the July 15, 2011 final rule:

Multiple Scores

Some creditors may obtain multiple credit scores from consumer reporting agencies in connection with their underwriting processes. A creditor may use one or more of those scores in taking adverse action.
Section 1100F of the Dodd-Frank Act only requires a person to disclose a single credit score used in taking adverse action.

When a creditor obtains multiple scores but only uses one in making the decision, the creditor must disclose the credit score that it used. Commenters asked what credit score or scores creditors should disclose when creditors use multiple scores in taking adverse action, for example, from different consumer reporting agencies. Section 1100F of the Dodd-Frank Act does not specify what credit score should be disclosed in such cases, but only requires a person to disclose a single credit score that is used by the person in making the credit decision. A creditor would comply with the statute by disclosing any of the credit scores that it used. The Board expects that creditors will have policies and procedures to determine which of the multiple credit scores was used in taking adverse action. For instance, a creditor could have policies and procedures specifying that: (1) When the creditor obtains or creates multiple credit scores but only uses one of those credit scores in taking adverse action, for example, by using the low, middle, high, or most recent score, the creditor would disclose that credit score and information relating to that credit score; and (2) when a creditor uses multiple credit scores in taking adverse action, for example, by computing the average of all the credit scores obtained, the creditor would disclose any one of those credit scores and information relating to the credit score.

thank you

If we use a tri-merge report but we do not use a credit score to make a credit decision, can we disclose the score and factors of the same credit reporting agency on all NOATs?

Thanks,

If you did not use a credit score in the decision you don't provide the credit score disclosure.

We also obtained your credit score from this consumer reporting agency and used it in making our credit decision.

If you are disclosing the credit score on the AAN then you are telling your applicant you used it in the decision.

I recall reading somewhere stating that even if we didn't use the score, it was on the credit report and how are we going to proof that we didn't use it and that it was best to just disclose it.

thanks,

Banker-12, that is why many of us recommend removing the credit score from credit reports if you aren't using it. If it is there (and you claim to not use it), it opens up quite a bit of gray area for debate and criticism.

Well, you either use one or you don't. If you use it you disclose it. If you don't you don't.

If you're not using the score then why is it being obtained? And I agree, if the score is present you will have a difficult time convincing an examiner it is not being used. But if you are not using it you are giving the consumer false information if you are disclosing it.

IOWs it is kind of a Catch 22.

If you truly do not use the score then I would advise having that feature turned off.

And I can assure you, whether you claim to use the score or not, if there is a "border line" application the presence of the credit score is going to influence the decision, whether consciously or unconsciously.

We had it turned off, but we started processing applications through the secondary market and these lenders require the credit score so we turned it back on.

Talk to your CRA rep. You should be able to only pull the scores for the secondary mortgage applications. They would be pulled under a separate product code.

At times, the applicant does not qualify under the secondary market requirements and we will underwrite it under our own internal product to see if they qualify. if they don't qualify, we will end up with a credit report with the score and will have to send an NOAT - will be back to where we started (score on the report) and which agency to disclose if we don't use the score but unable to prove if we looked at it or not.

Are you sending an AAN to the applicant when they don't qualify for the secondary market before you review it? If not, it seems to me that the credit score did play into the decision - at least for the secondary market options.

The other lender sends the AAN because they make the credit decision. I'm not sure if it's send before we review it but we know it has been declined when we start underwriting for our loan product and send them an AAN if declined as well.

Thanks,

As far as not providing the score information, etc. if not using the credit score to make the denial decision, I think we may have debated this before in another thread, but how do you reconcile that with 615(a)?

(a) Duties of users taking adverse actions on the basis of information contained in consumer reports. If any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall

(2) provide to the consumer written or electronic disclosure

(A) of a numerical credit score as defined in section 609(f)(2)(A) used by such per- son in taking any adverse action based in whole or in part on any information in a consumer report; and

(B) of the information set forth in subparagraphs (B) through (E) of section 609(f)(1);

I understand you rely on the language of the Model Notice, but the Regulation itself says if you took adverse action based on any information contained in a "consumer report." It does not say "took adverse action based on the credit score."