The Fair Credit Reporting Act and credit score exception

The holiday shopping is underway, and my house is completely decked out in decorations. My home décor wouldn’t be complete without the most important elf, Snowflake, who is keeping a close eye on kiddos to report back to the big guy at the north pole that they are showing kindness, love and cooperation. Here is a picture of Snowflakes latest hiding spot which my daughter was wildly impressed with (thank you Pinterest).

Let’s get back to more important things like the Fair Credit Reporting Act which is implemented by Regulation V. Recently, the Compliance Team has received quite a few questions on this regulation, specifically the Risk-Based Pricing Notice (RBPN). Today we will go over the requirements of the RBPN and a few of the exceptions. Appendix H to Part 1022 Contains Model Forms for Risk-Based Pricing and Credit Score Disclosure Exception Notices.

Under section 1022.72 of Regulation V, a credit union is required to provide the member with a RBPN any time it uses a credit report in connection with an application for credit and provides different rates based on the credit score of the applicant. However, section 1022.74 of Regulation V discusses the exceptions for when a RBPN is not required. Specifically, section 1022.74(d) and (e) both allow for a credit score notice to be provided in lieu of the RBPN when the member requests for an extension of credit which will be secured by one to four units of residential real property.

 

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