Topic: Credit Reports
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Can we obtain a numerical credit score when running credit reports on our employees?
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We believe that you may be able to obtain an employee’s numerical credit score, provided that you obtain the employee’s authorization after clearly disclosing that you are pulling a numerical credit score (not an employee credit report). The FCRA expressly allows you to obtain a “consumer report” for any “employment purpose,” provided that you follow…
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If an employee signed a “standing authorization” for credit reports when hired, can we rely on that to pull the employee’s credit reports on a periodic basis?
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We believe that your organization could use a standing authorization to pull credit reports throughout an employee’s employment at the bank. The FCRA requires that you have the employee’s written authorization to obtain the employee’s credit report after making a “clear and conspicuous disclosure . . . in a document that consists solely of the…
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Can we take an adverse action against a bank employee based on the employee’s credit report or credit score?
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We are not aware of any state or federal laws that would prevent you from taking an adverse action against an employee based on a credit report or credit score, with one caveat (discussed below). State and Federal Law: State law: Illinois’s Employee Credit Privacy Act prohibits most employers from retaliating against an employee based…
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Is there any fair lending problem with offering a special rate to customers if they qualify with a certain credit score?
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The program you described could have the potential for fair lending issues stemming from the credit score cutoff, which might have a disparate impact on a protected class (for example, if women tend to have lower credit scores than men, and therefore fewer women qualify for the program). Therefore, you may want to reduce the…
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Can we charge a credit report fee on consumer installment loans?
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Of course, a credit report fee would have to be included in the finance charge calculation, but we are not aware of any prohibitions or limitations on charging credit report fees. 12 CFR 1026.4(b)(4). If the loan is not subject to RESPA, there are no restrictions on “upcharging” with what could be considered an unearned…
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Are there any Illinois laws that would prevent us from pulling a credit report as permitted under the FCRA?
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We are not aware of any Illinois laws that would affect your ability to pull credit reports as permitted by the federal Fair Credit Reporting Act. The Illinois Consumer Fraud and Deceptive Business Practices Act allows consumers to place a “security freeze” on their credit reports if concerned about identity theft, but it has several…
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Can we run a credit report on an individual who is a personal guarantor for a business lease after the business missed a payment?
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We believe that a bank may obtain a credit report on the guarantor of a business lease under the Fair Credit Reporting Act (FCRA), but only for the purpose of reviewing the lease terms to decide whether to retain or modify the current lease terms, and provided that the lease agreement permits you to modify…
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If we use a merged report with multiple credit scores as the basis for an adverse action, how do we disclose the name and contact information of the agency providing the score?
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We recommend disclosing contact information for the reseller of the consumer credit information, though you may want to confirm this with your regulator. Under the Fair Credit Reporting Act, you are required to disclose the contact information for the “consumer reporting agency” providing the credit score used by the bank and the name of the…
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If we request an applicant’s credit score for a consumer loan, and the score is “N/A”, how do we handle listing the four key factors in the adverse action disclosure?
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You are not required to disclose the applicant’s credit score because the applicant does not have a credit score (unless your institution used information from the report to create its own credit score for the applicant). Dodd-Frank amended the Fair Credit Reporting Act (FCRA) to require creditors to include additional information in adverse action disclosures…