Disqualifying Loans Based On Prior Bankruptcy

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Question:

Is there any requirement that prevents a creditor from using an automatic "flag" for credit scoring that would deny an applicant whose credit history reveals a bankruptcy? Does it matter that the bankruptcy has been discharged or that a substantial amount of time has passed?

Answer:

Some creditors ignore bankruptcy and focus on the applicant's fundamentals, while others consider it an automatic disqualifier. Your only concern is that you make and apply your company's standard uniformly. Exceptions can lead to unpleasant encounters of the Reg B kind.

First published on BankersOnline.com 09/2/02