On March 1, the Federal Reserve Board and the Federal Trade Commission proposed new regulations for meeting the credit score disclosure requirements put forth in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
According to this statute, credit card issuers and other lenders must disclose credit scores and related information to consumers in risk-based pricing notices and adverse action notices if a credit score was used in setting credit terms or taking adverse action such as denying credit.
The proposed regulations would amend Regulation V, which implements the Fair Credit Reporting Act, by revising the content requirements of risk-based pricing notices and adding model forms to reflect the new credit score disclosure requirements.
Previous regulations on risk-based pricing notices took effect on Jan. 1.
According to the proposed regulations the amended risk-based pricing notices would include:
- A numerical credit score used in making the credit decision.
- The range of possible credit scores in the credit-scoring model used.
- Key factors that adversely affected the credit score of the consumer in the scoring model used.
- Date the credit score was created.
- Name of the person or entity providing the credit score.
The proposed regulations also would amend certain model notices in Regulation B, which implements the Equal Credit Opportunity Act, to incorporate the new credit score disclosure requirements. Credit card issuers and other lenders may use these model notices in Regulation B to comply with adverse action requirements of the Equal Credit Opportunity Act and the Fair Credit Reporting Act.
According to the proposed regulations, these amended model notices would include "the consumer's credit score, the date the credit score was created, the range of possible credit scores under the model used and up to four key factors that adversely affected the consumer's credit score (or up to five factors if the number of inquiries made with respect to that consumer report is one of the factors)."
The proposed regulations would take effect July 21, 2011.
According to a press release from the Federal Reserve Board, public comments on the proposed rules will be open for 30 days after the publication of the proposal in the Federal Register.