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Compliance Credit reporting changes coming
WASHINGTON (4/14/11)--The July implementation deadline for many portions of the Dodd-Frank Act is approaching, and many credit unions still have questions regarding how the new Dodd-Frank rules will impact their practices. As covered in this month’s Compliance Challenge, two of the many coming changes will impact disclosures required by the Fair Credit Reporting Act (FCRA). The Federal Reserve Board and the Federal Trade Commission proposed regulations regarding the credit score disclosure requirements of the Dodd-Frank Act. The statute requires creditors to disclose credit scores and related information to consumers in risk-based pricing (RBP) notices under the FCRA if a credit score was used in setting the credit terms. The Compliance Challenge addressed whether or not credit unions would need to replace their current RBP forms with new ones once the proposal is finalized. The Credit Union National Association has said that the answer to that question will depend on whether a credit union uses a consumer’s credit score to set the material terms of credit. The Dodd-Frank Act will also require creditors to disclose on adverse action notices a credit score that was used in taking any adverse action against a consumer and any information relating to that score. The Fed proposed to amend the combined Equal Credit Opportunity Act (ECOA)-FCRA model adverse action notices to include credit score information as well. Both the RBP and adverse action notices would be amended to include the following:
* A statement that a credit score takes into account information in a consumer report and a credit score can change over time; * The specific numerical credit score used in making the credit decision; * The range of possible credit scores; * Key factors that adversely affected the credit score such as late payments and high credit utilization; * The date on which the credit score was created; and * The name of the consumer reporting agency that provided the credit score.
The proposed RBP changes would add two new forms, giving credit unions a total of four risk-based pricing notices to contend with. For more specifics on these forms, see this month’s Compliance Challenge. Comments on the RBP and adverse action changes are being accepted through the end of today.


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