An individual applied for a consumer loan and was denied. We sent him an adverse action notice regarding our credit decision. Subsequently, his wife agreed to co-sign on the loan with him, so she added her name to his original application. We have decided to deny that application, too. Is the wife as a co-applicant entitled to an adverse action notice? If so, what should the notice contain?

Yes, the wife is entitled to an adverse action notice, but only if your denial was based at least in part on the information in her consumer report (which appears to be the case here).

Adverse action notices are required by two different laws. The Equal Credit Opportunity Act (ECOA) — as implemented by Regulation B — requires banks to send an adverse action notice to an “applicant” when the bank has denied their credit application. However, when there are multiple applicants for credit, the ECOA and Regulation B require an adverse action notice only for “the primary applicant where one is readily apparent.” Consequently, only the primary applicant (the husband) is entitled to a Regulation B adverse action notice.

However, the FCRA adverse action notice requirements apply to any “consumer” who is subject to the adverse action. Consequently, each co-applicant whose consumer credit information provided at least a partial basis for a credit denial is entitled to an individual FCRA adverse action notice. Consequently, if your credit denial was based at least in part on the wife’s consumer report, she must receive her own FCRA adverse action notice, the specific contents of which are outlined in the resources below. The FCRA adverse action notice should include, for example, the applicant’s numerical credit score and related information if the credit score was used in making the credit decision.

For resources related to our guidance, please see:

Regulation B, 12 CFR 1002.9(a) (“A creditor shall notify an applicant of action taken . . . concerning the creditor’s approval of, counteroffer to, or adverse action on the application; . . . .”)

Regulation B, 12 CFR 1002.2(e) (“Applicant means any person who requests or who has received an extension of credit from a creditor, and includes any person who is or may become contractually liable regarding an extension of credit. For purposes of § 1002.7(d), the term includes guarantors, sureties, endorsers, and similar parties.”)

Regulation B, 12 CFR 1002.9(f) (“When an application involves more than one applicant, notification need only be given to one of them but must be given to the primary applicant where one is readily apparent.”)

FTC Advisory Opinion to Stinneford (July 14, 2000) (“When there are two applicants a creditor cannot send a combined ECOA/FCRA adverse action notification to only the primary applicant if the application is denied, even in part, based on information in a co-applicant’s consumer report. In that circumstance, the co-applicant has been the subject of ‘adverse action’ and must be provided his or her own separate notification to satisfy the requirement of Section 615(a) of the FCRA. If the creditor has provided the ECOA-required information specified in Section 202.9(a)(2) of Regulation B to the primary applicant, it need not be included in the FCRA notice provided to the co-applicant.”)

FCRA, 15 USC 1681m(a) (“If any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall

(1) provide oral, written, or electronic notice of the adverse action to the consumer;

(2) provide to the consumer written or electronic disclosure (A) of a numerical credit score . . . used by such person in taking any adverse action based in whole or in part on any information in a consumer report; and (B) of the information set forth in subparagraphs (B) through (E) of section 1681g(f)(1) of this title;

(3) provide to the consumer orally, in writing, or electronically (A) the name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the person; and (B) a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken; and

(4) provide to the consumer an oral, written, or electronic notice of the consumer’s right (A) to obtain, under section 1681j of this title, a free copy of a consumer report on the consumer from the consumer reporting agency referred to in paragraph (3), which notice shall include an indication of the 60-day period under that section for obtaining such a copy; and (B) to dispute, under section 1681i of this title, with a consumer reporting agency the accuracy or completeness of any information in a consumer report furnished by the agency.”)

FCRA, 15 USC 1681g(f)(1) (Per 15 USC 1681m(a)(2)(B) above, the FCRA adverse action notice also must include “(B) the range of possible credit scores under the model used; (C) all of the key factors that adversely affected the credit score of the consumer in the model used, the total number of which shall not exceed 4, subject to paragraph (9); (D) the date on which the credit score was created; and (E) the name of the person or entity that provided the credit score or credit file upon which the credit score was created.”)