Credit Reports and Credit Scores

Question: Is there a requirement to provide the credit report to a consumer? If so, do we need to also give the credit score to the consumer?

Answer: The Fair Credit Report Act (FCRA) does not place a requirement on a financial institution to provide to the consumer a copy of a credit report that the institution obtains on the consumer. However, the FCRA’s provisions provide that a consumer reporting agency (“CRA”) may not prohibit the user of a credit report furnished by the CRA from disclosing the contents of the report to the consumer in instances where an adverse action is taken against the consumer based in whole or in part on the credit report. [15 USC § 1681e(c)]

Under the FCRA, specifically section 609(g), a financial institution who makes or arranges loans and who uses a consumer credit score in connection with an application initiated or sought by a consumer for a closed-end or open-end loan for a consumer purpose, that is secured by one to four units of residential real property, must provide the following to the consumer:

1. A copy of the credit score and accompanying information that is obtained from a CRA or which was developed and used by the user of the information; and,
2. A copy of the “Notice to the Home Loan Applicant” (“Notice”). [15 USC §§ 1681g(g)(1)(A), 1681g(f)]

The Notice must include the name, address, and telephone number of each CRA that provided a credit score that was used. [15 USC § 1681g(g)(1)(D)]

Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at [email protected] or visit www.LendersComplianceGroup.com.