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)]
[15 USC § 1681m(b)(1)]
Jonathan Foxx
President & Managing Director
Lenders
Compliance Group
