Compliance Q&A: FCRA
Does the Fair Credit Reporting Act permit CUs to share credit report information with applicant who are denied loans?
May 1, 2013
Q: Does the Fair Credit Reporting Act (FCRA) permit a credit union to share credit report information with the applicant in connection with a loan denial?
A: Yes. Section 1681e of the FCRA permits the credit union to disclose the contents of the report to the consumer, “if adverse action against the consumer has been taken by the user based in whole or in part on the report.” But, the credit union should check its contract with the credit bureau to see if it is permissible to provide the member with an actual copy of the report.
Q: Are credit unions required to give written adverse action notices?
A: The FCRA doesn’t require written notices. When a financial institution takes adverse action with respect to a consumer based—in whole or in part—on any information contained in a credit report, the financial institution shall provide an oral, written, or electronic notice of the adverse action to the consumer, according to Section 615 of the act.
On the other hand, Regulation B (ECOA) requires adverse action notices to be in writing for consumer credit. The term “in writing” includes electronic delivery of the notice if provided in compliance with the federal ESIGN statute. But, you may give the notifications for business credit verbally or in writing.