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Is there a presumption of privacy between applicants regarding credit report information? Can that information be included in an adverse action notice?

I have been told that there is no presumption of privacy between applicants regarding credit report information and that such information may be included in the Regulation B adverse action notice. Is that true?

Correct. The adverse action notice can explain to the applicant that the application was denied due to the co-applicant’s liens, judgments, or other negative credit history. However, credit scores are confidential and may not be shared, even among joint applicants. Thus, banks providing an applicant’s credit score because it was used in making an adverse decision, as required under §615(a)(2)(B) of the Fair Credit Reporting Act, should only provide it to the person to whom the credit score relates. If both reside at the same address, for example, separate envelopes containing credit scores could be inserted into the adverse action notice envelope. (January 2018)

Our question is regarding the Commentary at section 1002.9 (a)(1)-4 of Regulation B. It states: “When an application is missing information but provides sufficient data for a credit decision, the creditor may evaluate the application, make its credit decision, and notify the applicant accordingly. If credit is denied, the applicant must be given the specific reasons for the credit denial (or notice of the right to receive the reasons); in this instance, missing information or “incomplete application” cannot be given as the reason for the denial. “Does this mean if we are denying someone for both an incomplete application and a credit reason - we can only put the credit reason on the Notice of Denial? Or can we put both?

The commentary section quoted is for denial for reasons “other than “incompleteness.” If the bank is denying the application for incompleteness, see the commentary at section 1002.9(a)(1)-3. This is an either-or response. It cannot be both. For example, say that the application is incomplete, but the bank is denying it due to the credit history and credit score of the applicant; in other words, the bank has enough information to deny the loan without additional information from the borrower. In that case, the bank would not use the fact that the application is incomplete as a reason for denial; the bank made a credit decision with the information it already had available. On the other hand, if the bank is denying the application because it is incomplete, then that is its reason for denial. (May 2017)

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