On an unsecured consumer purpose loan, what are we required to do in terms of credit report? We pull these, and a 3 page document prints with the score which is made up of “Your Credit Score and The Price You Pay For Credit, and a Score disclosure”.
We currently don’t have them sign that on these loans and we don’t always give them a copy of this.
Thoughts? I’m not talking real estate loans, but rather vehicle loans, debt consolidations, etc.
Does your bank comply with the Risk Based Pricing requirement or the Credit Score Disclosure Exception?
FCRA/Regulation V requires that lenders comply with the Risk Based Pricing guidelines for consumer loans (e.g. primarily for personal, family or household purposes), regardless of the collateral. In general, the rule is that if you offer or provide credit to a consumer on material terms that are materially less favorable than the most favorable material terms available to a substantial proportion of your consumers and your decision for this pricing was based in whole or in part on a consumer report then you should be providing the risk based pricing notice to those consumers that receive the less favorable terms, unless you comply with the Credit Score Disclosure exception. Most banks use this exception. If your bank uses the exception notices/credit score disclosure notice, then you should be providing it in connection with all consumer applications where a consumer report is used. There are model notices in Reg V for 1-4 family secured, non RE secured and credit report, but no credit score available.
These are not required to be signed, however, you do want to ensure you can prove your process for providing them.
Here’s a link to Regulation V: https://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=265fb98f13755c81ea96b0ae3b8fc462&tpl=/ecfrbrowse/Title12/12cfr1022_main_02.tpl. Look specifically at Subpart H, 1022.70-75