This appendix contains ten sample
notification forms. Forms C-1 through C-4 are intended for use in
notifying an applicant that adverse action has been taken on an application
or account under section 202.9(a)(1) and (2)(i) of this regulation.
Form C-5 is a notice of disclosure of the right to request specific
reasons for adverse action under section 202.9(a)(1) and (2)(ii).
Form C-6 is designed for use in notifying an applicant, under section
202.9(c)(2), that an application is incomplete. Forms C-7 and C-8
are intended for use in connection with applications for business
credit under section 202.9(a)(3). Form C-9 is designed for use in
notifying an applicant of the right to receive a copy of an appraisal
under section 202.14. Form C-10 is designed for use in notifying an
applicant for nonmortgage credit that the creditor is requesting applicant-characteristic
information.
Form C-1 contains the Fair Credit Reporting Act disclosure
as required by sections 615(a) and (b) of that act. Forms C-2 through
C-5 contain only the section 615(a) disclosure (that a creditor obtained
information from a consumer reporting agency that was considered in
the credit decision and, as applicable, a credit score used in taking
adverse action along with related information). A creditor must provide
the section 615(a) disclosure when adverse action is taken against
a consumer based on information from a consumer reporting agency.
A creditor must provide the section 615(b) disclosure when adverse
action is taken based on information from an outside source other
than a consumer reporting agency. In addition, a creditor must provide
the section 615(b) disclosure if the creditor obtained information
from an affiliate other than information in a consumer report or other
than information concerning the affiliate’s own transactions or experiences
with the consumer. Creditors may comply with the disclosure requirements
for adverse action based on information in a consumer report obtained
from an affiliate by providing either the section 615(a) or section
615(b) disclosure. Optional language in Forms C-1 through C-5 may
be used to direct the consumer to the entity that provided the credit
score for any questions about the credit score, along with the entity’s
contact information. Creditors may use or not use this additional
language without losing the safe harbor, since the language is optional.
The sample forms are illustrative and may not be appropriate
for all creditors. They were designed to include some of the factors
that creditors most commonly consider. If a creditor chooses to use
the checklist of reasons provided in one of the sample forms in this
appendix and if reasons commonly used by the creditor are not provided
on the form, the creditor should modify the checklist by substituting
or adding other reasons. For example, if “inadequate downpayment”
or “no deposit relationship with us” are common reasons for taking
adverse action on an application, the creditor ought to add or substitute
such reasons for those presently contained on the sample forms.
If the reasons listed on the forms are not the factors
actually used, a creditor will not satisfy the notice requirement
by simply checking the closest identifiable factor listed. For example,
some creditors consider only references from banks or other depository
institutions and disregard finance company references altogether;
their statement of reasons should disclose “insufficient bank references,”
not “insufficient credit references.” Similarly, a creditor that considers
bank references and other credit references as distinct factors should
treat the two factors separately and disclose them as appropriate.
The creditor should either add such other factors to the form or check
“other” and include the appropriate explanation. The creditor need
not, however, describe how or why a factor adversely affected the
application. For example, the notice may say “length of residence”
rather than “too short a period of residence.”
A creditor may design its own notification
forms or use all or a portion of the forms contained in this appendix.
Proper use of Forms C-1 through C-4 will satisfy the requirement of
section 202.9(a)(2)(i). Proper use of Forms C-5 and C-6 constitutes
full compliance with sections 202.9(a)(2)(ii) and 202.9(c)(2), respectively.
Proper use of Forms C-7 and C-8 will satisfy the requirements of section
202.9(a)(2)(i) and (ii), respectively, for applications for business
credit. Proper use of Form C-9 will satisfy the requirements of section
202.14 of this part. Proper use of Form C-10 will satisfy the requirements
of section 202.5(b)(1) of this part.
