QUESTION
Our regulator just
cited us for not providing the required information about their credit reports to
our applicants upon request. We were going by the disclosure features of our
loan origination system as well as our policy documents. But, when we
investigated, the problem seems to be that our credit report agency is the
culprit, since they did not provide the information to the applicants upon request.
What is the required information that applicants should be getting from the
credit report agency when they request it?
ANSWER
Disclosure
requirements have expanded considerably under the Fair Credit Report Act (FCRA)
revisions made by the Consumer Credit Reporting Reform Act of 1996 and the FACT
Act of 2003 (FACTA). So, I can see how it may be hard sometimes to keep up with
them. Under Section 609(a) of the FCRA, every consumer reporting agency (CRA)
must, upon request and proper identification of any consumer, disclose to the consumer:
1.All information in the
consumer’s file at the time of the request. However, the CRA is not required to
disclose to a consumer any information concerning credit scores or any other
risk scores or predictors relating to the consumer.
2.The sources of the
information. But the sources of information acquired solely for use in
preparing an investigative consumer report and actually used for no other
purpose need not be disclosed.
3.(A) Identification of
each person (including each end-user identified that procured a consumer report:
[§ 607(e)(1); § 1681e] that
(i)for employment
purposes, during the 2-year period preceding the date on which the request is
made; or
(ii)for any other purpose,
during the 1-year period preceding the date on which the request is made.
(B)An identification of a person under subparagraph
(A) must include
(i)the name of the person
or, if applicable, the trade name (written in full) under which such person
conducts business; and
(ii)upon request of the consumer,
the address and telephone number of the person.
4.The dates, original
payees, and amounts of any checks upon which any adverse characterization of
the consumer, included in the file at the time of the disclosure is based.
5.A record of all
inquiries received by the agency during the 1-year period preceding the request
that identified the consumer in connection with a credit or insurance
transaction that was not initiated by the consumer.
6.If the consumer
requests the credit file and not the credit score, then a statement that the consumer
may request and obtain a credit score must be issued. I should mention that this
requirement stems from FACTA, which added a provision that requires consumer reporting agencies to make
available to consumers upon request (for a reasonable fee set by the Federal
Trade Commission) the consumer’s current or most recently calculated credit
score, as well as the range of scores possible, the top four factors that
negatively affected the score, the date the score was created, and the name of
the company providing the underlying file or score. [§ 609(f)]
For a more technical understanding, your compliance
personnel should review Section 609(a), as it tells what consumer reporting
agencies must disclose to consumers, upon request and proper identification. Tell
them to read Section 609 in conjunction with the FCRA § 610 [15 USC § 1681h], which
gives the conditions of disclosure, and the FCRA § 612 [15 USC § 1681j],
which gives the charges for disclosure.
Jonathan Foxx
Managing Director
Lenders Compliance Group
