Credit Scores and Adverse Action Notices

• January 30, 2019
• CLA Regulatory Compliance Team

Credit scores, both how they are calculated and how they are used, receive a great deal of attention—  and rightly so. When you use a credit score to deny a loan, your adverse action notice must include credit score information. Periodically confirm that your adverse action notices are complying not just with Regulation B, but the Fair Credit Reporting Act (FCRA) as well. If a financial institution uses a credit score to deny a consumer loan, the FCRA requires the financial institution to provide the applicant with the following information:

• The credit score itself
• The range of possible credit scores in the model used to score the consumer
• Up to four key factors that affected the consumer’s score
• The date on which the credit score was created
• The name of the “person or entity” (usually the credit bureau) that provided the credit score
• The name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the person
• A statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken
• The consumer’s right to:
  • Obtain, under section 612 [§ 1681j], a free copy of a consumer report on the consumer from the consumer reporting agency referred to in paragraph (3), which notice shall include an indication of the 60-day period under that section for obtaining such a copy; and
  • Dispute, under section 611 [§ 1681i], with a consumer reporting agency the accuracy or completeness of any information in a consumer report furnished by the agency.

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