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Contacting the Applicant

Answered by: 
Randy Carey

Question: 
This question relates to obtaining support for adverse credit items. We have a policy that allows approval of a loan if an adverse credit item of $500 or less exists on an applicant's credit report, as long as a satisfactory explanation from the applicant stating the reason for the delinquency is obtained. Is it in violation of Reg B, FCRA or other to contact the applicant for explanation (verbal or written) of that adverse item for our records?
Answer: 

There is no regulatory problem with asking a credit applicant to explain items on their credit report. Just make sure that this is done in a consistent manner to be sure that this does not lead to discriminatory practices. For example, if you ask a male for an explanation and make them a loan, but don't bother to ask a female and the regulators pull that denied file then you have big problems.

First published on BankersOnline.com 10/01/07

First published on 10/01/2007

Filed under: 
Compliance
Filed under compliance as: 
Credit Report
IT
Regulators

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