If a credit score is used in setting material terms of credit or in taking adverse action, the statute requires creditors to disclose credit scores and related information to consumers in notices under the Fair Credit Reporting Act (FCRA).
The final rules amend:
- Regulation V (Fair Credit Reporting) to revise the content requirements for risk-based pricing notices, and to add related model forms that reflect the new credit score disclosure requirements.
- Certain model notices in Regulation B (Equal Credit Opportunity), which combine the adverse action notice requirements for Regulation B and the FCRA, to reflect the new credit score disclosure requirements.
The revised rules will be effective sometime in early- to mid-August.
Failure to comply with adverse action requirements can lead to civil liability and enforcement actions from the regulators.
Upon completion of this program your staff will understand:
- The revisions to the risk-based pricing notices in regulation V, including:
- New model risk-based pricing notices;
- Whether use of the revised risk-based pricing notice is required if the creditor has chosen to provide credit score exception notices;
- When a creditor is deemed to be "using" a credit score; and
- Whether a risk-based pricing notice must be provided to a co-signer or guarantor;
- The revised rules for adverse action forms in Regulation B including:
- New model adverse action forms;
- Who should receive an adverse action notice when a credit application involves multiple applicants;
- Whether the credit score of a guarantor or a co-signer should be disclosed to the applicant, where the creditor uses the credit score of the guarantor or the co-signer in taking adverse action;
- Which credit score is disclosed when a creditor obtains multiple credit scores from consumer reporting agencies in connection with their underwriting processes; and
- Whether credit score information must be disclosed in FCRA adverse action notices for non-lending products, such as a deposit account, insurance product, or employment.
The program is designed for compliance officers, auditors and for those with responsibility for assuring compliance throughout the lending department.