Sharing credit reports

Question: When we have obtained a credit report in connection with underwriting a loan application, can we give a copy to the consumer? Does it make a difference if we approve or deny the application?

Answer: Let's start with some history. In the "old days," the credit bureaus generally barred the user of the report (your institution, for example) from sharing the report with the consumer. The credit reporting agencies wanted to force the consumer to come and get it. Many consumers considered this problematic, particularly if the information in the report caused them harm such as a credit denial.

In response to consumer objections to the practice, Congress changed the FCRA. The act now reads: " 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, if adverse action against the consumer has been taken by the user based in whole or in part on the report."

Whether this means that you may actually send home the consumer with a copy is subject to debate. That debate may be decided by your state law. What is clearly permissible is that you can show a copy of the report to the consumer and discuss the contents. Most consumers feel that because the information is about them, they have a right to see it. That is difficult to argue against. Before you decide what to do, look at your agreement with the credit reporting agency. Also consult your attorney. But don't let the credit reporting agency tell you that you can't discuss or share the contents of the report with the consumer in question.

Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 7, No. 14, 12/02