New Credit Score Disclosure

The Fair Credit Reporting Act (FCRA) was enacted in 1970 to promote accuracy, fairness and privacy of the consumer information collected by consumer reporting agencies (CRAs). There has been a number of amendments in using consumer credit reports to make rental decisions, specifically the adverse action notice.

Dodd-Frank Wall Street Reform and Consumer Protection Act amends the FCRA to require the disclosure of the credit score when the adverse action is based in whole or in part on a numerical credit score. This is a new disclosure effective July 21, 2011.

As a result, when adverse action is taken in whole or in part because of a credit score, for example denying or requiring a co-signer, it is now required to disclose that score to the consumer with a Score Disclosure Letter.

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires creditors to disclose a credit score in risk-based pricing notices, if one was used in making the credit decision, along with certain other additional information.

http://www.ftc.gov/opa/2011/07/riskbased.shtm

The Fact Act Risk Based Pricing Rule, issued by the Federal Reserve Board and the Federal Trade Commission, requires any company that uses a credit report or score in connection with a credit decision – including tenant screening – to send notice to a consumer when, based on a credit report or score, the company denies credit or grants credit on “material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers.” It essentially requires lenders to notify consumers when they charge consumers more for credit based on the consumers’ credit reports.

http://www.ftc.gov/os/2011/07/110706riskbasedpricingfrn.pdf

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