The Consumer Credit Report: To Share or Not to Share?
Article By: Wendy Bernard | CMA Board Member
That is certainly a question I here all the time, and the answer is a definite “maybe”.
So you pulled credit for a mortgage applicant and the client wants to see her credit report. Do you:
- A. Say, “I would love to show it to you but it’s against the law to do so.”
- B. Say, “I would love to show it to you but it’s against my company policy to do so.”
- C. Say, “Sure, I would be happy to show you your credit report!”…and then provide the report directly to the client.
If you answered “A”: Well, “A” is definitely the wrong answer, but I wish I had a dollar for every time I have heard that response. The sharing of a consumer credit report with the subject of the report is covered under the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) (FCRA). For example, when a consumer is denied credit, Section 607 (c) of FCRA specifically states that, “A consumer reporting agency may not prohibit a user of a consumer report furnished by the agency on a consumer from disclosing the contents of the report to the consumer,…” The 2011 Federal Trade Commission’s Staff Report (FTC’s Staff Report), “40 Years of Experience with the Fair Credit Reporting Act”, clarifies as follows: “User May Disclose Report to Consumer: The FCRA does not prohibit a consumer report user from providing a copy of the report, or otherwise disclosing it or any item or items of information in it (or any score based on the information), to the consumer who is the subject of the report. The FTC’s Staff Report also states that “A consumer report user does not become a CRA by regularly giving a copy of the report, or otherwise disclosing it, to the consumer who is the subject of the report (or the consumer’s representative), because it is not disclosing the information to a “third party.””
If you answered “B”: then you must defer to your company’s policy. The sharing of the credit report with the consumer who is the subject of the report under FCRA is permissive, and not mandatory. Notice, the operative word in the first paragraph above is “May”. In other words, while FCRA permits you to share the credit report with the consumer as described in this writing, FCRA does not mandate such sharing. FCRA also does not require a user of consumer reports to explain the report to the consumer, or to disclose credit scores after the loan has closed, or to provide more than one credit related disclosure per loan transaction. FCRA does mandate disclosure of certain credit related information to the consumer, such as the credit score used by the lender in its approval, declination, counteroffer or risk based pricing decision.
If you answered “C”: your sharing of the credit report with your client is permitted under FCRA and the FTC’s Staff Report and the consumer will certainly appreciate the gesture. However, you must defer to your company’s policies regarding disclosure, handling and protection of the consumer’s credit report. Remember, companies are held accountable for their respective compliance rules and must establish compliance management systems that reflect their interpretation and understanding of the laws and regulations governing their business practices. Furthermore, sharing of the consumer’s credit report with third parties is strictly prohibited except with those with a permissible purpose under FCRA. “FCRA was enacted to (1) prevent the misuse of sensitive consumer information by limiting recipients to those who have a legitimate need for it; (2) improve the accuracy and integrity of consumer reports; and (3) promote the efficiency of the nation’s banking and consumer credit systems.” (FTC’s Staff Report). FCRA is enforced by the FTC, The Consumer Financial Protection Bureau (CFPB) and State law.
This information is provided for informational purposes for CMA members and does not constitute legal advice to any party in any manner. Wendy Bernard is Counsel to the CMA; Managing Partner at The Bernard Law Group: Director of Compliance at Lenders Compliance Group; contact Wendy at 203.805.4521 or firstname.lastname@example.org