Adverse Action Notice: Credit Score Disclosure

Posted By: BankonComp

Adverse Action Notice: Credit Score Disclosure - 06/29/11 12:48 AM

Reading the federal register regarding the new credit score disclosure requirement added by 1100F of the Dodd-Frank Wall Street Reform and Consumer Protection Act, it states that "In some cases, the Bank who is required to provide an adverse action notice under the FCRA may use a consumer report, but not a credit score, in taking the adverse action. Under section 1100F of the Dodd-Frank Act, the Bank is not required to disclose a credit score and related information if a credit score is not used in taking the adverse action."

In our case, although the credit score (number) is included in our Equifax reports, we do not specifically use the credit score (number) as a reason for declining a credit request, only other reasons obtained from the credit report (i.e. delinquency, no credit history, excessive obligations, etc.). Therefore my understanding would be, based on the federal register, that our Bank will not be required to provide this new requirement on or with our adverse action notice. Does any agree or does someone have a different understanding, believing that we should?

Any input and guidance is greatly appreciated.
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 06/29/11 03:24 AM

If you don't use the score, have then removed from the report. Once you see the reaction of the loan officers, you might have a better understanding of the use within your organization. You are going to have a hard time having a score on the report and then claim that it has absolutely no influence on your credit decisions. My suggestion is to either provide the disclosure or remove the scores.
Posted By: Kathleen O. Blanchard

Re: Adverse Action Notice: Credit Score Disclosure - 06/29/11 03:30 AM

I agree. It has always been hard to say a score is not part of the decision when it is right there in the file. This issue is not new, just this disclosure is new.
Posted By: Queen Mum

Re: Adverse Action Notice: Credit Score Disclosure - 07/06/11 05:00 PM

Since we use the Exception Notice and provide that anytime we pull a credit report, are we still required to type in all this information again to have it print in the AA Notice?
Posted By: HRH Okie Banker

Re: Adverse Action Notice: Credit Score Disclosure - 07/06/11 05:15 PM

So QM, you are currently providing the Exception Notice when giving an AAN?
Posted By: Queen Mum

Re: Adverse Action Notice: Credit Score Disclosure - 07/06/11 05:22 PM

If we pull a credit report, we provide the Exception Notice to the customer regardless of whether the loan is approved, denied or withdrawn.
Posted By: Queen Mum

Re: Adverse Action Notice: Credit Score Disclosure - 07/06/11 05:25 PM

If we pull a credit report, we provide the Exception Notice to the customer regardless of whether the loan is approved, denied or withdrawn.
Posted By: HRH Okie Banker

Re: Adverse Action Notice: Credit Score Disclosure - 07/06/11 05:47 PM

Got it. We have only been providing the Exception Notice for approved loans and not with AANs.
Posted By: ahkcompliance

Re: Adverse Action Notice: Credit Score Disclosure - 07/06/11 06:16 PM

We provide the exception notice with both approved and denied loans. From what I hear, some vendors are incorporating the exception notice language with the AAN. If your vendor is doing this, you can just give the AAN to satisfy the requirements, but if teh vendor only updates the AAN requirements, you will still have to provide both notices.
Posted By: Carolina Blue

Re: Adverse Action Notice: Credit Score Disclosure - 07/15/11 04:31 PM

Randy or Kathleen,
To play devil's advocate, if there is no written policy stating all loans under XXX credit score must be denied, then how is a loan being denied for credit score? The loan may be denied for a factor affecting the credit score, but not the score itself. So if we pulled credit with a score and denied the loan for bankrupcty are we required to give them their credit score? (And we do not want to remove the score because we are using it for pricing the loan.) Any thoughts?
Posted By: Oursisnottoreasonwhy

Re: Adverse Action Notice: Credit Score Disclosure - 07/15/11 07:10 PM

As explained in the proposed rule, the Board recognizes that a key factor(s) that adversely affected the consumer’s credit score may be the same as a specific reason(s) for denying credit or taking other adverse action.

However, some specific reasons for taking adverse action may be unrelated to a consumer’s credit score, such as reasons related to the consumer’s income, employment, or residency.

Therefore, the Board continues to believe the disclosure of both the key factors that adversely affected the consumer’s credit score and the specific reasons for denying credit or taking other adverse action is necessary to fulfill the separate requirements of the ECOA and the FCRA. The Board believes providing separate lists, and thus distinguishing factors that adversely affected the credit score from reasons for the adverse action determination, will be more useful and clearer for consumers.
Posted By: Rubaiyat

Re: Adverse Action Notice: Credit Score Disclosure - 07/15/11 08:59 PM

All this has my brain muddled and I'm questioning what we had already been doing.

For HE loans and HELOCs we have not been providing the RBPN or Exception Notice because the rates for these products are set and do not vary, i.e., no risk-based pricing. So, the new Reg V changes also would not apply for these products. However, we have updated our AANs for ALL denials to include the credit score and 4/5 credit score reasons, since credit reports for all products include a credit score.

Does this sound right?
Posted By: Dan Persfull

Re: Adverse Action Notice: Credit Score Disclosure - 07/15/11 09:07 PM

Quote:
For HE loans and HELOCs we have not been providing the RBPN or Exception Notice because the rates for these products are set and do not vary, i.e., no risk-based pricing.


If you have not been providing the H-3 exception notice then I hope you have continued to provide the credit score and notice to home applicant disclosures required by section 609(g) of the FCRA.
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/16/11 05:54 AM

Originally Posted By: Carolina Blue
Randy or Kathleen,
To play devil's advocate, if there is no written policy stating all loans under XXX credit score must be denied, then how is a loan being denied for credit score?


Then why get them? If the score does not influence the credit decision in anyway - delete them from the report and you won't have to deal with any of this. Conversing, how are you going to prove that it had no impact when the number is staring the underwriter in the face?
Posted By: Sheldon Hendrix

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 01:35 AM

I would recommend a practical application of this - if you denied based on credit and would normally check the box that says "we denied your request based either in whole or in part..", that the knee jerk reaction should be to include the new score disclosure as well. That is of course if you use credit scores.

We primarily use credit scores for pricing purposes only (retail division anyways), so I could argue that the new disclosure isn't needed most of the time, but why not just keep it simple and not even go there. As Randy stated, it would be hard to defend that the score didn't have weight on your decision.

If anyone sees any holes in this approach, I'd be very appreciative if they were brought to my attention before I do training on Wednesday. smile
Posted By: Sheldon Hendrix

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 01:39 AM

Also, is anyone interpreting the new rule to basically mean that each consumer gets their own segregated AAN due to privacy reasons since it will include their personal credit score? That's my takeaway, and what was suggested in ABA's recently Staff Analysis.
Posted By: Kathleen O. Blanchard

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 02:02 AM

Yes, that is what the Fed indicated it expects to see in the discussion of the reg.
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 02:08 PM

However, it has nothing to do with privacy. The FCRA requires that separate disclosures be sent. The Fed addressed the privacy issue in the joint intent release in 2003 - saying that if you apply jointly with another person - privacy is out the window.
Posted By: Rubaiyat

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 02:13 PM

Yes, we have been providing the credit score and notice to applicant disclosures. So, other than that, in this situation, we don't need to do anything else other than use the updated AAN, correct?
Posted By: Queen Mum

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 03:58 PM

Originally Posted By: rlcarey
Originally Posted By: Carolina Blue
Randy or Kathleen,
To play devil's advocate, if there is no written policy stating all loans under XXX credit score must be denied, then how is a loan being denied for credit score?


Then why get them? If the score does not influence the credit decision in anyway - delete them from the report and you won't have to deal with any of this. Conversing, how are you going to prove that it had no impact when the number is staring the underwriter in the face?


We also pull credit reports for loans to sell on the secondary market. They require the credit score. There isn't a way to check and uncheck whether to receive it is there? It's either on or off?
Posted By: Kathleen O. Blanchard

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 04:35 PM

My comment is based upon this FRB remark re the adverse action/credit score notice in the section discussing co-applicants:

"Section 202.9(f) of Regulation B permits a creditor to provide an adverse action notice to only one applicant, and requires a creditor to provide an adverse action notice to the primary applicant, when a primary applicant is readily apparent. In contrast, section 615(a) of the FCRA requires a creditor to provide the disclosures mandated by that section to "any consumer" against whom adverse action is taken, if the adverse action is based in whole or in part on information from a consumer report. The FCRA’s reference to "any consumer" would seem to include co-applicants. Given privacy and customer relations concerns, the Board expects that creditors would generally provide separate FCRA adverse action notices to each applicant with only the individual’s credit score on each notice."
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 04:49 PM

Then they have sort of changed thier tune from 2003.

Many commenters were concerned about the co-applicant’s or guarantor’s privacy when the reasons for adverse action pertaining to creditworthiness are given to the primary applicant. When a person agrees to be a co-applicant, guarantor, or similar party, however, there is (or should be) a general understanding that information will be shared. Accordingly, the rule has been adopted as proposed.
Posted By: Kathleen O. Blanchard

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 05:54 PM

I agree. I recall the comment from 2003. Perhaps they have decided to more be "consumer friendly/consumer protective" in this post-meltdown environment, where privacy also gets extra attention.
Posted By: Sheldon Hendrix

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 06:40 PM

Originally Posted By: rlcarey
However, it has nothing to do with privacy. The FCRA requires that separate disclosures be sent. The Fed addressed the privacy issue in the joint intent release in 2003 - saying that if you apply jointly with another person - privacy is out the window.


I picked up on a reference to that in reading the final rule this morning.
Posted By: Dan Persfull

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 06:48 PM

Quote:
the Board expects that creditors would generally provide separate FCRA adverse action notices to each applicant with only the individual’s credit score on each notice."


They are referencing the FCRA AAN and not the ECOA AAN. For specific reasons required under the ECOA (Reg B) I think I would still follow the 2003 guidance for specific reasons to the applicant.

If you read the rule one way it implies you disclose the co-applicant's score to the applicant if it was used for the denial but in the discussion for guarantors and co-signers it states the rule does not expect a guarantor's or co-signer's score be disclosed to the applicant. So I guess it comes down to which fork of the tongue you want to follow until some additional clarification is released. This is just another example of a knee jerk reaction to meet time lines of the Dodd Frank Act.
Posted By: Kathleen O. Blanchard

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 08:52 PM

I agree they are discussing FCRA. I would come up with a procedure that works mechanically and follows the FCRA and ECOA requirements as best as possible (you can share reasons but not scores, essentially). The discussion for this change does state that you can say "bankruptcy" and the non-bankrupt co-applicant should be able to understand that is not them.

I think they are drawing a line on just how personal you can get in a shared notice and decided a score was too personal.
Posted By: Andy_Z

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 09:06 PM

Back to the credit score being on the report, how will you convince your examiner it isn't used? An examiner can assume if loans with low scores are denied, they're used. The examiner gets to define low. When is the last time you had a subjective area in Reg B or Fair Lending and just knew that if you explained this to your examiner, they'd understand and ignore what they saw? It ain't happening!

Now a question, what is the difference between pleading this case in your exit meeting, or alone in the middle of a forest?
Posted By: raitchjay

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 09:14 PM

Andy, for clarification: the rule states that Dodd-Frank requires disclosure "if a credit score was used in taking adverse action" and goes on to say "if the credit score was a factor in the adverse decision" the credit score should be disclosed. I'm thinking it would be non-compliant to include the credit score when the denial was based completely on, for example, insufficient collateral. Someone with an 800 credit score can get denied for insufficient collateral just like someone with a 500 credit score. You agree that in that case, the score should NOT be disclosed? (I know the scenarios presented in this thread have been about denying for reasons related to the credit score, but not the credit score itself, and i agree in those instances it still needs to be disclosed. Just wanting to see if you're in agreement about this.) Thanks.
Posted By: Kathleen O. Blanchard

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 09:16 PM

I have to agree with you on this Andy, and state that this is not new. Way back in the 90s banks who were not scoring were having the score removed from credit reports so that they did not have to try to prove the score was not used. If the process was purely judgemental, we got rid of the score. It had no connection to our lending process.
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 09:18 PM

Someone with an 800 credit score can get denied for insufficient collateral just like someone with a 500 credit score. You agree that in that case, the score should NOT be disclosed?

I agree with that statement.
Posted By: raitchjay

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 09:19 PM

Thanks Randy.
Posted By: Kathleen O. Blanchard

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 09:21 PM

I agree as well. The score had nothing to do with the adverse action.
Posted By: Princess Romeo

Re: Adverse Action Notice: Credit Score Disclosure - 07/18/11 09:37 PM

One of my common "findings" in review Adverse Action notices is when the FCRA box is checked even though the decline reason had nothing to do with the credit report - i.e. the appraised value was too low.

I didn't cite it a high risk finding, more of carelessness and the fact that the bank just entitled the consumer to receive a free copy of his/her report when they really weren't entitled, and the biggest risk was having the credit reporting agency take action because of that.

However now, more than ever, it will be important to ensure the correct box is, or is NOT, checked!
Posted By: Sheldon Hendrix

Re: Adverse Action Notice: Credit Score Disclosure - 07/19/11 02:22 AM

Originally Posted By: Kathleen B
I agree they are discussing FCRA. I would come up with a procedure that works mechanically and follows the FCRA and ECOA requirements as best as possible (you can share reasons but not scores, essentially). The discussion for this change does state that you can say "bankruptcy" and the non-bankrupt co-applicant should be able to understand that is not them.

I think they are drawing a line on just how personal you can get in a shared notice and decided a score was too personal.


Why not just check "other" and state "co-applicants credit history" if you need to provide a denial to the other applicant whose credit had no weight on a credit decision. I believe something like that was suggested in the final rule. It's clear that only each individual whose credit history is entitled to a separate AAN with a credit disclosure.
Posted By: Kathleen O. Blanchard

Re: Adverse Action Notice: Credit Score Disclosure - 07/19/11 02:30 AM

Originally Posted By: Princess Romeo
One of my common "findings" in review Adverse Action notices is when the FCRA box is checked even though the decline reason had nothing to do with the credit report - i.e. the appraised value was too low.

I didn't cite it a high risk finding, more of carelessness and the fact that the bank just entitled the consumer to receive a free copy of his/her report when they really weren't entitled, and the biggest risk was having the credit reporting agency take action because of that.

However now, more than ever, it will be important to ensure the correct box is, or is NOT, checked!

Agreed. I see that very frequently. The box is automatically checked. And I see crazy comments added there.
Posted By: ahkcompliance

Re: Adverse Action Notice: Credit Score Disclosure - 07/19/11 01:43 PM

With all the changes, I think the review process will be very important. Currently, I (Comliance Officer) review all adverse action notices before they are sent out. I have actually been able to correct those little mistakes, such as checking the FCRA box when not needed.

If you don't have a review process, I would recommend. If you do, make sure your reviewer is up to speed on all the changes relating to AANs.
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/19/11 02:13 PM

Why not just check "other" and state "co-applicants credit history"....

Because that does not meet the specificity requirements of Regulation B. There is one credit application from a Regulation B standpoint, you have to tell the applicants (whether in one notice or two) the specific reasons for adverse action. You cannot say - sorry - you don't meet our credit standards.
Posted By: NLC

Re: Adverse Action Notice: Credit Score Disclosure - 07/19/11 02:28 PM

Question about adverse action notice for a debit card in which we pulled a credit report. Do we use the new form and disclose the four items on the credit report? As I read the reg it only talks about credit denials.
Posted By: Sheldon Hendrix

Re: Adverse Action Notice: Credit Score Disclosure - 07/20/11 02:17 AM

Originally Posted By: rlcarey
Why not just check "other" and state "co-applicants credit history"....

Because that does not meet the specificity requirements of Regulation B. There is one credit application from a Regulation B standpoint, you have to tell the applicants (whether in one notice or two) the specific reasons for adverse action. You cannot say - sorry - you don't meet our credit standards.


So being as specific as to say the "co-applicant's credit history had weaknesses" is not enough? I guess I was just fixated on the following from the commentary:
3. Description of reasons. A creditor need not describe how or why a factor adversely affected an applicant. For example, the notice may say “length of residence” rather than “too short a period of residence.”

Just trying to rationalize that point, so I would be very appreciative if the holes in my logic were discussed in further detail. I know there will be questions on this point in the future..
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/20/11 06:03 AM

I think credit history is too broad - you would not get away with that on a single applicant. It could be past due loans, collections, bankruptcy, lack of credit history, etc, etc. Also, you will not find such a broad statement included on the example AANs in Regulation B.

Statement of specific reasons. The statement of reasons for adverse action required by paragraph (a)(2)(i) of this section must be specific and indicate the principal reason(s) for the adverse action. Statements that the adverse action was based on the creditor's internal standards or policies or that the applicant, joint applicant, or similar party failed to achieve a qualifying score on the creditor's credit scoring system are insufficient.
Posted By: Sheldon Hendrix

Re: Adverse Action Notice: Credit Score Disclosure - 07/20/11 04:19 PM

I think it is too broad for the applicant themself, and yes in that situation the citation you are quoting would definitely apply. I think it is appropriate, given the citation I quoated, that it would be acceptable to quote that to a coapplicant.

But now thinking.....

I may be answering my own question here, but would appreciate a ratification if possible. If the primary applicant's credit history is the sole contributor to decision a denial, then would we not be required to provide just one AAN to just the primary applicant since Reg. B only requires one AAN on joint applicants?
Posted By: Dolly Nugent

Re: Adverse Action Notice: Credit Score Disclosure - 07/20/11 05:13 PM

So, it appears that in the case of a joint application the primary reasons for denial would be the same on both notices; however, each applicant would receive their own credit score disclsoure information.
Posted By: raitchjay

Re: Adverse Action Notice: Credit Score Disclosure - 07/20/11 05:25 PM

"So, it appears that in the case of a joint application the primary reasons for denial would be the same on both notices; however, each applicant would receive their own credit score disclsoure information."

Only if both scores (or the factors that led to both scores) contributed to the denial.
Posted By: Sheldon Hendrix

Re: Adverse Action Notice: Credit Score Disclosure - 07/20/11 05:33 PM

I agree with Dolly - I think the reasons would be specific to each applicant, and on that note, you would only be required to provide both an AAN (with the new credit score disclosure) if both applicants credit history contributed the the adverse action.

Posted By: DD Regs

Re: Adverse Action Notice: Credit Score Disclosure - 07/21/11 07:20 PM

Does this tool still apply today?

http://www.bankersonline.com/tools/bd_ecoa_fcrachart.pdf
Posted By: Sheldon Hendrix

Re: Adverse Action Notice: Credit Score Disclosure - 07/25/11 04:01 PM

I'm going to audit that tonight if possible.. I didn't realize BOL had that out there.
Posted By: Truffle Royale

Re: Adverse Action Notice: Credit Score Disclosure - 07/25/11 05:04 PM

Please and thank you !^^^^ I'll print copies for my underwriters tomorrow.
Posted By: DD Regs

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 02:29 AM

Dan had chimed in on this subject in a similar thread.

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1581699#Post1581699
Posted By: ibcbanker

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 05:41 PM

Originally Posted By: raitchjay
"So, it appears that in the case of a joint application the primary reasons for denial would be the same on both notices; however, each applicant would receive their own credit score disclsoure information."

Only if both scores (or the factors that led to both scores) contributed to the denial.

If you have a credit score included on your report, but it didn't adversely affect your credit decision (such as collateral, length of employment, etc) can you omit the section which discloses the credit score and factors? Or must you have it in the form, but leave it blank. That would seem confusing to a consumer?
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 09:08 PM

can you omit the section which discloses the credit score and factors?

Yes - that language, if you read the model, is optional.
Posted By: TEL

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 09:54 PM

Regarding the AAN and credit score and factors adversly affecting the credit score - - I spoke with Experian as they have informed me to used the score, range, date and factors from the RBPN exeption notice (EN)and copy to the AAN. When I questioned why the RBPN-EN did not have the factors, I was advised that I was looking at a non-mortgage RBPN-EN and that they (factors adversy affecting the score) were not required for non-mortgage loans. Is this true on the AAN too - if so does anyone have a reference where it says that?
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 10:00 PM

Is this true on the AAN too.

That is not a true statement. Only the NHLA previously required the factors to be listed, that is why the non-mortgage RBPN did not include them.
Posted By: TEL

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 10:08 PM

So, if I understand correctly, althought the non-mortgage RBPN does not include the factors, the non-mortgage AAN does?
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 10:04 PM

Yes.
Posted By: TEL

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 10:16 PM

Thank you - that was what I originally had thought/found. So - Experian doesn't appear to feel the reasons are required on the AAN for non-mortgage. I will will have to work through that - or maybe they will see the light by august 15. However, in the meantime, any issue in pulling the mortgage RBPN-EN to get the reasons - if the loan is approved I could send the mortgage RBPN-EN and just pull off the NHLA to non-mortgage applicants? (I believe Experian has us choose one way of the other)
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 10:17 PM

Every credit report that I have seen that contains a credit score contains the key factors in the report itself. Whether they are printing it on some disclosure document for you is a whole nother issue.
Posted By: TEL

Re: Adverse Action Notice: Credit Score Disclosure - 07/26/11 10:27 PM

Yes, I have found it in on the credit report itself - and will have staff use that. I was just mentally working through work arounds. Thanks for your help - I really appreciate it.
Posted By: morirse de risa

Re: Adverse Action Notice: Credit Score Disclosure - 07/28/11 03:25 PM

New question: Do we need to provide the credit score info on the AAN if we are providing a Notice to Home Loan Applicant?

It looks like the reg states we need to, but these notices seem to provide the same information...?
Posted By: Dan Persfull

Re: Adverse Action Notice: Credit Score Disclosure - 07/28/11 03:59 PM

Quote:
New question: Do we need to provide the credit score info on the AAN if we are providing a Notice to Home Loan Applicant?


Not a new question but the answer is yes. Reread the final rule beginning on page 13.
Posted By: Mrs. Rizzo

Re: Adverse Action Notice: Credit Score Disclosure - 07/28/11 06:18 PM

What about using a 3rd party vendor vs. pulling credit directly from the credit bureau? Do you put the name and address of the vendor or the agency name of which you used the score to make the credit decision?
Posted By: WHAT ?!?!

Re: Adverse Action Notice: Credit Score Disclosure - 07/28/11 07:06 PM

What information needs to be provided when someone is denied a checking account through ChexSystems?
Posted By: isaidno

Re: Adverse Action Notice: Credit Score Disclosure - 08/01/11 02:53 PM

Chexsystems has their own adverse action form to be completed. It has satisfied the regulators so far for us.
Posted By: In the middle of it

Re: Adverse Action Notice: Credit Score Disclosure - 08/03/11 09:11 PM

I'm returning to the original question. Today I started reading the new Compliance Action newsletter and there is a handy chart on page 4 that ties together information causing a denial and notices required. One entry describes reasons for denial related to credit history, but the score is OK. The listed action for FCRA is "Provide FCRA notice but not the credit score notice." Some posters are saying if the score is received, it is assumed it is used and should be disclosed. I've been instructing our consumer underwriter to include the disclosure if the denial is related to the information in the report that ties to the score, even if the score specifically is not the basis for the denial. We do look at the score, but it may not be low enough to cause a denial. Are we over- disclosing?
Posted By: Rick Kohrumel

Re: Adverse Action Notice: Credit Score Disclosure - 08/03/11 09:39 PM

My bank is going the conservative route: since the credit score is on the credit report, we're giving the credit score reasons. We don't wish to be second-guessed by an examiner.

That said, I have a segue question: The Fed's Final Notice appeared at first blush (to many reading) to take the guarantor out of the AA equation completely. It seems to me that the guarantor was removed from needing to be given the extra credit score-related information (and certainly not the ECOA AA notice with reasons for denial), but when the guarantor's credit report was used wholly or in part to deny the applicant's credit app, the guarantor STILL needs to get the basic FCRA notice with the name, address and phone # of the credit bureau used. Is that correct?
Posted By: rlcarey

Re: Adverse Action Notice: Credit Score Disclosure - 08/03/11 11:36 PM

No - a guarantor is not an applicant and therfore, you are not taking adverse action against the guarantor under either regulation.
Posted By: Princess Romeo

Re: Adverse Action Notice: Credit Score Disclosure - 08/04/11 03:41 AM

^^^^ This - and PLEASE don't give the regulators any other ideas!
Posted By: SaaL

Re: Adverse Action Notice: Credit Score Disclosure - 08/04/11 03:54 PM

Originally Posted By: Mrs. Rizzo
What about using a 3rd party vendor vs. pulling credit directly from the credit bureau? Do you put the name and address of the vendor or the agency name of which you used the score to make the credit decision?


I'm wondering the same thing - if we use a reseller (SARMA) and list SARMA's contact information in the section that discloses that we obtained information from a CRA to make our credit decision, and we also disclose that we used a score and disclose the middle score and related information - can we use the verbiage "we also obtained your credit score from this cra and used it in making our credit decision" even though that directs them to the re-seller, or is that misleading and should we be disclosing the optional name/address info of the specific cra (i.e. Equifax) in the credit score disclosure section?
Posted By: Rick Kohrumel

Re: Adverse Action Notice: Credit Score Disclosure - 08/04/11 09:15 PM

Thanks Randy. My 'regulatory pause' was due to the underlying purpose of the FCRA: to provide persons with incorrect data on their consumer credit reports with an alert that information in their reports led to an adverse action, so that they can then pursue the path of challenging/correcting the bad stuff. So, since a strict reading does seem to exclude them from guarantors (and co-signers) being excluded from the 'heads up' FCRA notification process... until they're an applicant or co-applicant. Banks best get the differentiation down pat!
Posted By: Rick Kohrumel

Re: Adverse Action Notice: Credit Score Disclosure - 08/04/11 09:19 PM

The answer I received years ago on this is that the party that ultimately provided the credit reports to you is the "credit reporting agency" to YOU, and that is the name you provide. However, I have seen banks also go the extra mile and also give the root credit bureau information.

Has anyone heard of an examiner criticize either of these?
Posted By: zitch70

Re: Adverse Action Notice: Credit Score Disclosure - 08/09/11 03:20 PM

We will be using the model form C-5 for AAN for deposit account denials. We use Chexsystems for the report, but the branch floor (new accounts) does not get the Qualfile score section of the report. So the decision to open or deny is not based upon a score. The Qualifle score does appear for the administrater level but they do not make any decisions to open or not and they are not located at the branches.
Posted By: elvislives

Re: Adverse Action Notice: Credit Score Disclosure - 08/11/11 03:15 PM

Originally Posted By: Rick Kohrumel
The answer I received years ago on this is that the party that ultimately provided the credit reports to you is the "credit reporting agency" to YOU, and that is the name you provide. However, I have seen banks also go the extra mile and also give the root credit bureau information.

Has anyone heard of an examiner criticize either of these?


I have been searching for this answer in the threads too. We pull our credit reports through Kroll Factual Data. Previously we have only ever listed Kroll on our AAN. That decision was made long before my time so I've been trying to find what information/documentation that was based on. Of course nobody here remembers. Due to software changes, in order to get the credit score, range and key factors to print on the AAN now, we have to list the agency it comes from. The software was also changed limiting us to only listing 3 agencies (used to let us list 4). I called our software provider and asked them why and the rep told me we only need three lines to list the agencies that are providing the scores on a merged report. They can't advise us on listing a third party provider. Argh! I finally called our examiner and here's what he said (please don't shoot the messenger; I'm very well aware our examiner gives the most bizarre interpretations):
If Kroll is only passing through information to us from Experian, Equifax and TransUnion and is not analyzing and/or making adjustments to the information, they are not a CRA and would not need to be listed on the AAN.

Everything I've found in the threads so far contradicts that opinion. I still don't know what to do.
Posted By: Dan Persfull

Re: Adverse Action Notice: Credit Score Disclosure - 08/11/11 03:40 PM

click here
Posted By: elvislives

Re: Adverse Action Notice: Credit Score Disclosure - 08/11/11 07:37 PM

The 4th link was exactly what I needed. I hadn't gone back that far in my search yet. Thank you.