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FCRA Guidance Needed on Score Disclosures

Question: 
With regards to the new FACT Act/Fair Credit requirements; is there any guidance on how lenders should provide the credit scores and reasons for the scores? Can we provide a copy of the credit report to the borrower along with the disclosure?
Answer: 

Dan Persfull: If you will check out the FCRA/FACT Act forum on BOL you'll find a lot of discussion on Sec. 212. This section also has model language for the notice. To the best of my knowledge there is no issued guidance yet, and there is no requirement under the FACT act that any regulations be issued on this section so we may very well be on our own for this one.

Contract provision with your credit report provider may prevent you from giving a copy of the report to the applicant. Reg B allows you to "disclose" the information to the applicant and Reg V allows you to "disclose" the credit score. It is not, in my opinion, a wise move to give the applicant an actual copy of the credit report because of the personal information contained in it that could be used for identity theft should the applicant lose the report. Liabilty could possibly come back to the bank in such a case.

Andy Zavoina: Note that Section 607(c) of the FCRA states as follows, "A consumer reporting agency may not prohibit a user of a consumer report furnished by the agency on a consumer from disclosing the contents of the report to the consumer, if adverse action against the consumer has been taken by the user based in whole or in part on the report."

So if you deny a credit or service you may disclose the report contents. This is not clear as to whether this means a written copy may be provided or not. I believe you can, but that doesn't mean I would. As Dan noted, you have risks in doing this. You have subscriber information on your reports that you don't necessarily want to provide, they are not is a "consumer friendly" format and the ID theft risks already noted. If the consumer isn't denied, the contract provision preventing disclosure would be proper. And this type of information is best delivered by the agency. They can discuss with the consumer how to read it, what it means and how to contest entries better than most bankers.

First published on BankersOnline.com 4/18/05

First published on 04/18/2005

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