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What Adverse Action Reason to Use?

Answered by: 
David A. Dickinson

Question: 
We have an application for a new checking account. Part of our approval processing involves running a credit report, which is disclosed on our application. This person's credit appears to be fine, but in conversation with the potential customer, we feel that this is someone with whom we do not want to do business. He has admitted to us that he has had problems dealing with just about everyone with whom he has dealt, and has been banned from most business offices in the town in which he lives. I know that we do not have to do business with him, but what adverse action reason is acceptable? His credit is OK. Quite frankly, we think that he's got mental issues.
Answer: 

Since the customer didn't apply for a credit product, Regulation B does not apply; therefore, you don't have to list a reason for not opening the account. If you feel like you want to, you could state "undesirable character" or something like "we don't wish to do business with you". Again, you don't have to provide any reason for not opening a checking account when the credit report is not an issue.

First published on BankersOnline.com 8/09/10

First published on 08/09/2010

Filed under: 
Operations
Filed under operations as: 
Adverse Action
Credit Report

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