Dodd–Frank Wall Street Reform and Consumer Protection Act
Score Disclosure Letter required as of 7/21/2011
As of 7/21/2011 you are required to provide the consumer with a Score Disclosure Letter if you decline their application or impose additional conditions (such as a higher deposit) in order to accept the application. The new letter is available now.
2010 Dodd-Frank Consumer Protection Act Requirements
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. The Dodd-Frank requirements go into effect on July 21, 2011. 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. The final rules, finalized July 15, 2011, can be found at:http://www.ftc.gov/os/2011/07/110706riskbasedpricingfrn.pdf.
The phrase “less favorable terms” could include requiring a higher deposit, for example.
This new requirement is in addition to other ‘adverse action’ requirements already in effect.
A person is not required to provide a risk-based pricing notice to a guarantor, co-signer, surety, or endorser, but may still be required to provide the notice to the consumer.
Score Disclosure Letters are now available – see an example at: http://zipreports.com/forms/score_disclosure_sample.pdf