The Fair Credit Reporting Act (FCRA) requires you to provide customers with a notice before furnishing negative information to a credit bureau. Regulation V provides two model forms of notice for this purpose. While the FCRA and Regulation V do not require the use of these model notices, they do provide a safe harbor when using them.
We read the FCRA to require you to provide this notice only once per customer, even if the customer has multiple loans with your institution or you furnish negative information multiple times. Once you have provided the notice to the customer, the FCRA permits you to submit negative information regarding “the same . . . customer without providing additional notice to the customer.” While providing the notice just once should be sufficient for each customer, nothing in the FCRA prevents you from providing the notice multiple times (such as by printing it on every periodic statement).
The FCRA requires your bank to provide this notice at any time before reporting negative information, or at the latest, within thirty days after reporting the negative information. Some lenders choose to provide this notice to customers at the loan closing or with the initial loan disclosures. This practice is acceptable, because the notice can be provided at any time before reporting negative information and can be combined with other initial disclosures (except for open-end consumer credit — the FCRA prohibits lenders from incorporating the negative information notice into their initial disclosures for open-end consumer credit).
For resources related to our guidance, please see:
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Regulation V, Appendix B, Model Notices of Furnishing Negative Information (“Model Notice B-1: We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report. Model Notice B-2: We have told a credit bureau about a late payment, missed payment or other default on your account. This information may be reflected in your credit report.”)
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FCRA, 15 USC 1681s-2(a)(7)(A) (“(i) If any financial institution that extends credit and regularly and in the ordinary course of business furnishes information to a consumer reporting agency described in section 1681a (p) of this title furnishes negative information to such an agency regarding credit extended to a customer, the financial institution shall provide a notice of such furnishing of negative information, in writing, to the customer.”)
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FCRA, 15 USC 1681s-2(a)(7)(B) (“(i) The notice required under subparagraph (A) shall be provided to the customer prior to, or no later than 30 days after, furnishing the negative information to a consumer reporting agency described in section1681a(p) of this title.”)
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FCRA, 15 USC 1681s-2(a)(7)(B) (“(ii) If the notice is provided to the customer prior to furnishing the negative information to a consumer reporting agency, the notice may not be included in the initial disclosures provided under section 1637(a) of this title [the initial disclosures for open-end consumer credit plans].”)
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FCRA, 15 USC 1681s-2(a)(7)(A) (“(ii) After providing such notice, the financial institution may submit additional negative information to a consumer reporting agency described in section 1681a (p) of this title with respect to the same transaction, extension of credit, account, or customer without providing additional notice to the customer.”)
- FCRA, 15 USC 1681s-2(a)(7)(D) (“. . . . (ii) Use of model not required. No provision of this paragraph may be construed to require a financial institution to use any such model form prescribed by the Bureau. (iii) Compliance using model A financial institution shall be deemed to be in compliance with subparagraph (A) if the financial institution uses any model form prescribed by the Bureau under this subparagraph, or the financial institution uses any such model form and rearranges its format.