Adverse Action Notices

Answered by:

Question:

I recently saw a <a href="http://www.bankersonline.com/articles/v05n13/v05n13a7.html">question and answer</a> on BOL regarding adverse action letters to all individuals applying for credit. What if your prospective borrower is a business? (1) is an adverse action letter required and (2) if so, is a letter required to go to all owners associated with the business? Taking it a step further, if individuals apply for a business loan, is an adverse action letter required in that situation?

Answer:

Yes. Adverse action letters are required for business applicants unless the business is very large. See Regulation B, 202.9 for guidance.As for notices under the Fair Credit Reporting Act, the notices must go to the consumer whose credit report was used to make the denial.

First published on BankersOnline.com 1/7/02