When it comes to adverse action notices, remember that two different regulatory requirements can often come into play, the Equal Credit Opportunity Act (Regulation B) and the Fair Credit Reporting Act (FCRA). While Regulation B extends to all types of credit, the FCRA’s focus is really focused on the use of consumer reports. While Regulation B has some potential relief built in for business credit applicants (depending on business size and method of application), there’s often a misconception that an institution gets an “out’ all together from providing an adverse action notice when an application is primarily for business or commercial purposes.
The FCRA has its own adverse action notification requirements, triggered when adverse action is taken on a “consumer” that is based in any way on a consumer report. When a credit score is involved, that must also be disclosed as well.
Jerod explains more in the video.
Published
2024/05/13