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Thursday, June 23, 2016

Adverse Action based on Non-CRA Information

Adverse Action based on Non-CRA Information

QUESTION
We increased the cost of credit to a borrower on the basis of information we did not receive from a consumer reporting agency. Could you let us know what are our obligations, such as disclosure, under these circumstances?

ANSWER
The type of information covered by the disclosure requirement is information obtained from a party other than a consumer reporting agency that bears upon the consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living. [15 USC § 1681m(b)(1)]

If a company denies or increases the charge for consumer credit in whole or in part because of certain information obtained from a party other than a consumer reporting agency, the company must, at the time that the adverse action is communicated to the consumer, clearly and accurately disclose to the consumer his or her right to make a written request for the reasons for the adverse action within sixty days.

If the consumer makes such a written request in a timely manner, the company must provide the reasons for the adverse action within a reasonable period of time. 
[15 USC § 1681m(b)(1)]

Jonathan Foxx
President & Managing Director 
Lenders Compliance Group