The purpose of the obligations imposed on users of credit
information is to allow applicants to correct erroneous reports. Included
in the definition of “applicants” are comakers, guarantors, or sureties.
The requirements for disclosure are triggered by either a denial of
credit or an increase in the cost of credit. If credit is approved,
but for a lesser amount than the original request, a denial under
the act has occurred. In addition, denial of an overdraft, refusal
to authorize a credit card purchase, and other, general types of consumer
credit transactions covered by Regulation Z, are subject to requirements for disclosure.
Banks are permitted to disclose orally the information
required under the act. However, if the action resulting in a denial
of credit under the FCRA also meets the definition of adverse action
under Regulation B (12 CFR 202.2(c)), the bank must make additional
disclosures to the consumer (12 CFR 202.9). Although the required
disclosures for both the FCRA and Regulation B may be provided on
the same sheet of paper, they cannot be substituted for one another.
To meet the complex requirements of both the FCRA and Regulation B,
banks should use form letters, copies of which may be kept in files
with the completed application forms. That practice allows internal
monitoring of compliance and provides evidence in the event of subsequent
litigation.
