Equal Credit Opportunity, 41590-41602 [2011-17585]

Agencies

• FEDERAL RESERVE SYSTEM

[Federal Register Volume 76, Number 136 (Friday, July 15, 2011)]
[Rules and Regulations]
[Pages 41590-41602]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17585]


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FEDERAL RESERVE SYSTEM

12 CFR Part 202

[Regulation B; Docket No. R-1408]
RIN 7100-AD67


Equal Credit Opportunity

AGENCY: Board of Governors of the Federal Reserve System (Board).

ACTION: Final rule.

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SUMMARY: Section 701 of the Equal Credit Opportunity Act (ECOA) 
requires a creditor to notify a credit applicant when it has taken 
adverse action against the applicant. The ECOA adverse action 
requirements are implemented in the Board's Regulation B. Section 
615(a) of the Fair Credit Reporting Act (FCRA) also requires a person 
to provide a notice when the person takes an adverse action against a 
consumer based in whole or in part on information in a consumer report. 
Certain model notices in Regulation B include the content required by 
both the ECOA and the FCRA adverse action provisions, so that creditors 
can use the model notices to comply with the adverse action 
requirements of both statutes. The Board is amending these model 
notices in Regulation B to include the disclosure of credit scores and 
related information if a credit score is used in taking adverse action. 
The revised model notices reflect the new content requirements in 
section 615(a) of the FCRA as amended by section 1100F of the Dodd-
Frank Wall Street Reform and Consumer Protection Act.

DATES: These rules are effective August 15, 2011.

FOR FURTHER INFORMATION CONTACT: Krista P. Ayoub, Counsel; Mandie K. 
Aubrey or Nikita M. Pastor, Senior Attorneys; or Catherine Henderson, 
Attorney, Division of Consumer and Community Affairs, (202) 452-3667 or 
(202) 452-2412, Board of Governors of the Federal Reserve System, 20th 
and C Streets, NW., Washington, DC 20551. For users of a 
Telecommunications Device for the Deaf (TDD) only, contact (202) 263-
4869.

SUPPLEMENTARY INFORMATION:

I. Background

    The Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., 
makes it unlawful for creditors to discriminate in any aspect of a 
credit transaction on the basis of sex, race, color, religion, national 
origin, marital status, or age (provided the applicant has the capacity 
to contract), because all or part of an applicant's income derives from 
public assistance, or because an applicant has in good faith exercised 
any right under the Consumer Credit Protection Act. The Board's 
Regulation B (12 CFR part 202) implements the ECOA.
    Section 701(d) of the ECOA generally requires a creditor to notify 
a credit applicant against whom it has taken an adverse action. Under 
section 701(d)(6) of the ECOA, an adverse action generally means a 
denial or revocation of credit, a change in the terms of an existing 
credit arrangement, or a refusal to grant credit in substantially the 
amount or on substantially the terms requested.
    Section 615(a) of the FCRA, 15 U.S.C. 1681m(a), also requires a 
person to provide an adverse action notice when the person takes an 
adverse action based in whole or in part on information in a consumer 
report. The definition of adverse action in section 603(k) of the FCRA 
incorporates, for purposes of credit transactions, the definition of 
adverse action under the ECOA. The adverse action provisions in both 
the ECOA and the FCRA require certain disclosures to be given to 
consumers.
    The ECOA adverse action provisions are implemented in Regulation B. 
There are no implementing regulations for the adverse action 
requirements of section 615(a) of the FCRA. However, as explained in 
staff commentary that accompanies Regulation B, certain model notices 
in Regulation B include the content required by both the ECOA and the 
FCRA, so that persons can use the model notices to comply with the 
adverse action requirements of both statutes.
    On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) was signed into law. Public Law 111-
203, 124 Stat. 1376. Section 1100F of the Dodd-Frank Act amends section 
615(a)

[[Page 41591]]

of the FCRA to require creditors to disclose on FCRA adverse action 
notices a credit score used in taking any adverse action and 
information relating to that score. The effective date of these 
amendments is July 21, 2011.\1\
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    \1\ Section 1100H of the Dodd-Frank Act provides that the 
amendments in Subtitle H of Title X, which includes Section 1100F, 
become effective on the ``designated transfer date.'' The Secretary 
of the Treasury set the designated transfer date as July 21, 2011. 
75 FR 57252 (Sept. 20, 2010).
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    On March 15, 2011, the Board proposed to amend the model adverse 
action notices in Regulation B that incorporate the content 
requirements of FCRA section 615(a) to reflect the new content 
requirements added by section 1100F of the Dodd-Frank Act. 76 FR 13896. 
The comment period closed on April 14, 2011.\2\ The Board received more 
than 30 comment letters regarding the proposal from banks and other 
creditors, industry trade associations, consumer groups, individual 
consumers, and others. After considering the comments received, 
pursuant to its authority in section 703(a) of the ECOA, the Board is 
issuing revised model adverse action notices substantially as proposed. 
As revised, the adverse action model notices in Regulation B are 
consistent with the requirements of section 1100F of the Dodd-Frank Act 
to help facilitate compliance with that provision when it becomes 
effective.
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    \2\ Commenters also had until May 16, 2011 to provide comments 
on the Board's analysis of the proposal under the Paperwork 
Reduction Act.
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II. Section-by-Section Analysis

Section 202.12(b)(4)

    In 2007, the Board redesignated Sec.  202.17 of Regulation B as 
Sec.  202.16. See 72 FR 63451, November 9, 2007. However, a reference 
to Sec.  202.17 in Sec.  202.12(b)(4) was not revised to reflect the 
change. The Board is correcting the citation in Sec.  202.12(b)(4) so 
that it refers to Sec.  202.16.

Appendix C to Part 202--Sample Notification Forms

    Under section 701(d) of the ECOA, a creditor must provide to 
applicants against whom adverse action is taken either: (1) A statement 
of reasons for taking the adverse action as a matter of course; or (2) 
a notification of adverse action which discloses the applicant's right 
to a statement of reasons within thirty days after receipt by the 
creditor of a request made by the applicant within sixty days after the 
written notification. Section 615(a) of the FCRA requires a person to 
provide, in an adverse action notice, information regarding the 
consumer reporting agency that furnished the consumer report used in 
taking the adverse action. It also requires a person to disclose that a 
consumer has a right to a free consumer report and a right to dispute 
the accuracy or completeness of any information in a consumer report.
    Section 1100F of the Dodd-Frank Act amends section 615(a) of the 
FCRA to require that creditors disclose additional information on FCRA 
adverse action notices. The statute generally requires that a FCRA 
adverse action notice include: (1) A numerical credit score used in 
making the credit decision; (2) the range of possible scores under the 
model used; (3) 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 a key factor); 
(4) the date on which the credit score was created; and (5) the name of 
the person or entity that provided the credit score.

Model Notices C-1 Through C-5

General Content
    As explained in paragraph 2 of Appendix C to Part 202, model 
notices C-1 through C-5 may be used to comply with the adverse action 
provisions of both the ECOA and the FCRA. The Board is amending model 
notices C-1 through C-5 substantially as proposed to incorporate the 
additional content requirements prescribed by section 1100F of the 
Dodd-Frank Act.
    The Board proposed to revise Forms C-1 through C-5 to include, as 
applicable, a statement that the creditor obtained the consumer's 
credit score from a consumer reporting agency named in the notice, and 
used the score in making the credit decision. The proposed model 
notices also contained language stating that a credit score is a number 
that reflects the information in the consumer's consumer report, and 
that the consumer's credit score can change, depending on how the 
information in the consumer report changes. The proposed model notices 
provided space for the creditor to include the content required under 
section 1100F of the Dodd-Frank Act that is specific to the consumer. 
This content includes: 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 a key factor). The Board also 
proposed additional changes to Form C-3 for clarity, which are 
discussed in more detail below.
    In the proposal, the Board noted that section 1100F of the Dodd-
Frank Act requires a creditor to provide, if applicable, a consumer's 
credit score and related information to a consumer, regardless of 
whether the creditor provides a statement of specific reasons for 
taking the adverse action or a disclosure of the applicant's right to a 
statement of specific reasons for an adverse action. Therefore, a 
creditor would not comply with the adverse action provisions in section 
1100F by providing the required FCRA disclosures only if a consumer 
responds with a request for a statement of specific reasons for an 
adverse action. As a result, proposed Form C-5 reflected the 
requirement to provide the disclosures required by section 615(a) of 
the FCRA, including the consumer's credit score and key factors that 
adversely affected the consumer's credit score, at the time a creditor 
provides a disclosure of the applicant's right to a statement of 
specific reasons for the adverse action.
    The Board also proposed to amend comment 9(b)(2)-9 to clarify that 
the FCRA requires a creditor to disclose, as applicable, a credit score 
it used in taking adverse action along with related information, 
including 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 a key factor). Proposed comment 
9(b)(2)-9 also would have clarified that disclosing the key factors 
that adversely affected the consumer's credit score under the FCRA does 
not satisfy the ECOA requirement to disclose specific reasons for 
denying or taking other adverse action on an application or extension 
of credit.
    In addition, the Board proposed to amend paragraph 2 of Appendix C 
to discuss the new disclosure requirements set forth in section 1100F 
of the Dodd-Frank Act. Paragraph 2 of Appendix C discusses the 
disclosure requirements of section 615 of the FCRA that are contained 
in Forms C-1 through C-5. Paragraph 2 explains that Form C-1 contains 
the disclosures required by FCRA sections 615(a) and (b), and Forms C-2 
through C-5 contain only the disclosures required by FCRA section 
615(a).
    Paragraph 2 as revised would also state that the combined ECOA-FCRA 
disclosures in Form C-1 through Form C-5 must state that a creditor 
obtained information from a consumer reporting agency that was 
considered in the credit decision. Consistent with section 1100F of the 
Dodd-Frank Act, the Board

[[Page 41592]]

proposed to revise the paragraph to state that the combined disclosure 
must also include, as applicable, a credit score used in taking adverse 
action along with related information.
    The Board received several comments on the proposed changes to the 
model forms, as discussed below. The Board did not receive comments on 
the proposed changes to comment 9(b)(2)-9 or paragraph 2 of Appendix C. 
For the reasons discussed below, the final rule largely adopts the 
proposed changes to Appendix C and model forms C-1 through C-5. For 
clarity, a revision has been made pertaining to the optional disclosure 
of contact information for the entity that provided the credit score. 
Comment 9(b)(2)-9 is also adopted as proposed.
    Contact information for the entity that provided the credit score. 
Several industry commenters asked that the Board add language to the 
model forms directing the consumer to the consumer reporting agency for 
more information about the credit score. The commenters believed that 
consumers may otherwise contact creditors with questions about their 
credit score, even if creditors are not in a position to answer those 
questions.
    The Board is adding optional language to the model forms that 
creditors may use to direct the consumer to the entity (which may be a 
consumer reporting agency or the creditor itself, for a proprietary 
score that meets the definition of a credit score) that provided the 
credit score for any questions about the credit score, along with the 
entity's contact information. Because this language is optional, 
creditors may use or not use the additional language without losing the 
safe harbor provided under Regulation B and the ECOA. Paragraph 2 of 
Appendix C is revised to clarify that the disclosure of the entity's 
contact information is optional.
    Disclosure of source of credit score information. Some industry 
commenters expressed concern about the reference to ``this consumer 
reporting agency'' in the model form. One commenter requested that the 
Board provide flexibility to creditors to replace the general reference 
to ``this consumer reporting agency'' with a more specific reference to 
the name of the particular consumer reporting agency from which the 
creditor obtained the score being disclosed. This commenter noted that 
creditors need flexibility when a creditor bases its decision on 
reports from multiple consumer reporting agencies and only one score is 
disclosed on the adverse action notice.
    A creditor receives a safe harbor for compliance with Regulation B 
for proper use of the model forms. See paragraph 5 of Appendix C. 
Paragraph 3 of Appendix C notes that the model forms are illustrative, 
however, and may not be appropriate for all creditors. The instructions 
provide examples of instances where a creditor would need to modify the 
model forms to ensure that they are accurate for the creditor's 
purposes. Regulation B provides creditors flexibility to change the 
model forms as applicable and still receive the safe harbor provided in 
Regulation B, although creditors must make proper use of the model 
forms.
    When a creditor has based its adverse action decision on reports 
from multiple consumer reporting agencies, the Board thus expects that 
the creditor would replace the general reference to ``this consumer 
reporting agency'' with a more specific reference to the name of the 
consumer reporting agency from which the creditor obtained the score 
being disclosed, to avoid ambiguity and consumer confusion. Moreover, 
section 1100F of the Dodd-Frank Act requires disclosure of the source 
of the credit score. The Board does not believe that a general 
reference to ``this consumer reporting agency'' would satisfy the 
requirements of the statute when a creditor has based its adverse 
action decision on reports from multiple consumer reporting agencies.
    Disclosure that credit score has been used. Model forms C-1 through 
C-5 contain the following language: ``We also obtained your credit 
score from this consumer reporting agency and used it in making our 
credit decision.'' Some industry commenters requested that the Board 
revise this language to allow a creditor in all cases to disclose that 
the creditor ``may have used'' the credit score in making the credit 
decision because the commenters believe there are circumstances where 
it may be ambiguous whether a creditor used a credit score. For 
example, one commenter stated that if a creditor judgmentally evaluates 
a joint application, it might not be clear whether the underwriter used 
one of the co-applicants' credit score. To ensure compliance with 
section 1100F of the Dodd-Frank Act, these commenters noted that many 
creditors may prefer to disclose the applicant's credit score (along 
with related information) whenever they receive a score as part of the 
application process. To facilitate this, the commenters suggested that 
the Board change the new model language in Appendix C to indicate that 
the creditor ``may have used'' the credit score in making the credit 
decision. These commenters asserted that this revised language would 
allow creditors to provide credit score disclosures even if there is 
some ambiguity regarding whether a credit score was used in the credit 
decision without raising the question of whether the model language is 
accurate.
    The model forms do not include the suggested change. The 
commenters' suggestion would result in all consumers receiving a 
disclosure stating that their credit score ``may'' have been used. The 
Board believes that modifying the language in model forms C-1 through 
C-5 as suggested by commenters would likely confuse consumers, would 
not be consistent with the statute, and would substantially decrease 
the value of the disclosures for consumers. Creditors may still use the 
language in the model form stating that the creditor ``used'' a credit 
score (instead of ``may have used''), even if there is some ambiguity 
regarding whether a credit score obtained by the creditor was 
considered in a judgmental evaluation. As discussed further below, the 
Board does not believe that section 1100F of the Dodd-Frank Act sets a 
high threshold for what constitutes use of a credit score.
    Use of a credit score. In some cases, a creditor that is required 
to provide an adverse action notice under the FCRA may use a consumer 
report, but not a credit score, in taking the adverse action. Under 
section 1100F of the Dodd-Frank Act, a person is not required to 
disclose a credit score and related information if a credit score is 
not used in taking the adverse action. Therefore, the proposed 
amendments to Forms C-1 through C-5 generally were applicable only if a 
credit score was used in taking an adverse action. Some industry 
commenters stated that creditors should not be required to disclose 
credit score information when a creditor obtains but does not use a 
credit score, or when the credit score was not the primary cause of the 
adverse action decision.
    Section 1100F of the Dodd-Frank Act requires disclosure if a credit 
score was used in taking adverse action. A creditor that obtains a 
credit score and takes adverse action is required to disclose that 
score, unless the credit score played no role in the adverse action 
determination. If the credit score was a factor in the adverse action 
decision, even if it was not a significant factor, the creditor will 
have used the credit score for purposes of section 1100F of the Dodd-
Frank Act.
    A trade association representing motor vehicle dealers submitted a

[[Page 41593]]

comment letter asserting that in certain three-party transactions where 
the dealer is the original creditor, the dealer should not be subject 
to the requirements of section 1100F, because a third party that 
purchases the debt obligation from the dealer obtains the creditor 
score, rather than the dealer. This issue is outside the scope of this 
rulemaking under Regulation B and the ECOA, because it seeks an 
interpretation of the FCRA as it applies to a particular type of 
transaction. This issue is addressed, however, in the FCRA rulemaking 
under section 1100F of the Dodd-Frank Act published elsewhere in 
today's Federal Register notice.
    Disclosure that no credit score is available. In some cases, a 
creditor may try to obtain a credit score for an applicant, but the 
applicant may have insufficient credit history for the consumer 
reporting agency to generate a credit score. One commenter asked that 
the creditor have the option to provide the applicant notice that no 
credit score was available from a consumer reporting agency in the 
space available for the credit information disclosure.
    Section 1100F only applies when a creditor uses a credit score in 
taking adverse action. The creditor cannot disclose credit score 
information if an applicant has no credit score. Nothing in section 
1100F of the Dodd-Frank Act prevents a creditor, however, from 
providing the applicant notice that no credit score was available from 
a consumer reporting agency, although section 1100F does not require 
such notice.
    Key factors. Several industry commenters argued that creditors 
should have flexibility to disclose only factors that substantially 
affected the credit score. They asserted that requiring creditors to 
disclose the top four key factors (or five factors if the number of 
inquiries made with respect to that consumer report is a key factor) is 
burdensome and expensive for creditors, is confusing and will be of 
limited value to consumers. In contrast, one commenter stated that 
creditors should be required to disclose all factors that affected the 
credit score, not just the top four (or five) key factors.
    Section 1100F of the Dodd-Frank Act expressly requires disclosure 
of the top four (or five) key factors that adversely affected the 
credit score, whether or not the effect was substantial. A person 
taking adverse action must provide the consumer the information set 
forth in subparagraphs (B) through (E) of section 609(f)(1) of the 
FCRA. Section 609(f)(1)(C) of the FCRA requires disclosure of all of 
the key factors that adversely affected the credit score in the model 
used, up to four, subject to section 609(f)(9) of the FCRA, which 
states that if the key factors that adversely affected the credit score 
include the number of inquiries made with respect to the consumer 
report, the ``number of inquiries'' must be disclosed as a key factor.
    An industry commenter requested clarification that a creditor is 
permitted to rely on and disclose the key factors provided by consumer 
reporting agencies, without verification by the creditor. The commenter 
further asked for guidance in the event that a consumer reporting 
agency does not provide the key factors with the score.
    Under section 615(a) of the FCRA as amended by section 1100F of the 
Dodd-Frank Act, the person taking adverse action is responsible for 
providing the credit score disclosure, including the key factors 
adversely affecting the credit score. If a creditor is using a credit 
score purchased from a consumer reporting agency, the consumer 
reporting agency is in the best position to identify the key factors 
that affected the score, and the creditor could rely on that 
information in its disclosure to consumers. The Board acknowledges, 
however, that the contractual arrangements between creditors and 
consumer reporting agencies may vary as to how creditors will receive 
the credit score information necessary to comply with section 1100F. 
The imposition of requirements on consumer reporting agencies is not 
within the scope of this rulemaking under the ECOA.
    The proposed amendment to comment 9(b)(2)-9 clarified that 
disclosing the key factors that adversely affected the consumer's 
credit score does not satisfy the ECOA requirement to disclose specific 
reasons for denying or taking other adverse action on an application or 
extension of credit. Some industry commenters suggested that creditors 
only disclose either the key factors adversely affecting the consumer's 
credit score or the specific reasons for the adverse action decision, 
but not both. Other industry commenters asked that creditors be 
permitted to provide the list of key factors or specific reasons only 
once when the key factors that adversely affected the consumer's credit 
score are the same as the specific reasons for taking adverse action. 
Commenters suggested making a cross-reference to the first list rather 
than providing a second list.
    As explained in the proposed rule, the Board recognizes that a key 
factor(s) that adversely affected the consumer's credit score may be 
the same as a specific reason(s) for denying credit or taking other 
adverse action. However, some specific reasons for taking adverse 
action may be unrelated to a consumer's credit score, such as reasons 
related to the consumer's income, employment, or residency. Therefore, 
the Board continues to believe the disclosure of both the key factors 
that adversely affected the consumer's credit score and the specific 
reasons for denying credit or taking other adverse action is necessary 
to fulfill the separate requirements of the ECOA and the FCRA. The 
Board believes providing separate lists, and thus distinguishing 
factors that adversely affected the credit score from reasons for the 
adverse action determination, will be more useful and clearer for 
consumers.
    Number of inquiries. Several industry commenters suggested that 
creditors not be required to disclose the ``number of inquiries'' as a 
key factor that adversely affected the credit score if the number of 
inquiries is not one of the top four key factors. In these cases, the 
commenters said that the effect of the number of inquiries on the 
credit score is marginal, so that disclosing the ``number of 
inquiries'' as a key factor may be confusing to consumers.
    As discussed above, section 609(f)(9) of the FCRA states that if 
the number of inquiries is a key factor that adversely affected the 
consumer's credit score, that factor must be disclosed pursuant to 
section 609(f)(1)(C) of the FCRA, without regard to the numerical 
limitation. The FCRA accordingly requires disclosure of the ``number of 
inquiries'' as a key factor, regardless of whether it is one of the top 
four key factors.

Model Form C-3

    In addition to the content added to each of Forms C-1 through C-5, 
the Board proposed to amend Form C-3 for clarity. Form C-3 is a model 
notice that can be used by creditors that use a proprietary credit 
scoring system in taking adverse action. Proprietary scores are those 
developed by or for a particular creditor, as opposed to those 
developed by consumer reporting agencies or by a scoring company for 
use by multiple creditors. In the proposal, the Board explained that 
discussing two different types of credit scoring systems on Form C-3 
could be confusing for consumers.
    The Board proposed to amend Form C-3 to clarify the differences 
between a proprietary score and a credit score obtained from a consumer 
reporting agency. The proposed form allowed creditors to remove the 
reference to credit scoring in the title of the form. The proposed text 
permitted creditors to

[[Page 41594]]

clarify that the consumer's application was processed by a system that 
assigns a numerical value to the various items of information the 
creditor considers when evaluating the consumer's application, rather 
than a credit scoring system. The proposed form also added topic 
headings to help distinguish a proprietary score from a credit score 
obtained from a consumer reporting agency when both types of scores are 
used in making the credit decision. As explained in the supplemental 
information to the proposal, a person may amend, at its option, Form C-
3 to remove the references to a credit scoring system and add the 
additional headings, even if the creditor did not use both a 
proprietary score and a credit score obtained from a consumer reporting 
agency in taking adverse action. Form C-3 should help distinguish 
proprietary scores from credit scores obtained from consumer reporting 
agencies, even if both scores are not used in taking adverse action. 
For the reasons discussed below, the final rule adopts these additional 
changes to Form C-3.
    Proprietary scores. Several industry commenters specifically asked 
for guidance on when a proprietary score would be deemed a credit score 
for purposes of disclosure under section 1100F of the Dodd-Frank Act. 
These commenters also asked for clarification on what information a 
creditor should disclose under section 1100F when a creditor uses a 
proprietary score in taking adverse action. Some industry commenters 
indicated that a proprietary score should not be required to be 
disclosed under section 1100F of the Dodd-Frank Act because Congress 
intended for this provision to apply only to credit scores that are 
obtained from consumer reporting agencies, and disclosing proprietary 
scores would be confusing to consumers. Consumer advocates suggested 
that all proprietary scores, in particular credit-based insurance 
scores, be subject to disclosure under section 1100F.
    ``Credit score'' for purposes of section 1100F of the Dodd-Frank 
Act is defined to have the same meaning as in section 609(f)(2)(A) of 
the FCRA, 15 U.S.C. 1681g(f)(2)(A). Specifically, section 609(f)(2)(A) 
of the FCRA defines a credit score to mean ``a numerical value or a 
categorization derived from a statistical tool or modeling system used 
by a person who makes or arranges a loan to predict the likelihood of 
certain credit behaviors, including default.'' Accordingly, scores not 
used to predict the likelihood of certain credit behaviors, however, 
such as insurance scores or scores used to predict the likelihood of 
false identity, are not credit scores by definition, and thus are not 
required to be disclosed.
    Most credit scores that meet the FCRA definition are scores that a 
creditor obtains from a consumer reporting agency. Section 609(f)(2)(A) 
of the FCRA specifically excludes some--but not all--proprietary 
scores. Some lenders develop their own ``proprietary'' scores that may 
be based on one or more factors other than information in the 
consumer's credit report. For example, the definition of credit score 
does not include any mortgage score or rating of an automated 
underwriting system that considers one or more factors in addition to 
credit information, including the loan-to-value ratio, the amount of 
down payment, or the financial assets of a consumer.
    If a creditor uses a proprietary score that is based on one or more 
factors that are not information obtained from a consumer reporting 
agency, this proprietary score is not a credit score for purposes of 
section 1100F of the Dodd-Frank Act and thus does not need to be 
disclosed to the consumer. However, if the proprietary score is the 
basis for the adverse action, the creditor would be required to 
disclose the reasons the consumer did not score well compared to other 
applicants. See Sec.  202.9(a)(2)(i). The creditor may disclose those 
reasons in the ``Reasons for Denial of Credit'' section of Form C-3.
    If a creditor uses a proprietary score that does not meet the 
definition of a credit score for purposes of section 609(f)(2)(A) of 
the FCRA and does not use a credit score from a consumer reporting 
agency, the creditor would not be required to comply with section 1100F 
of the Dodd-Frank Act, because the creditor would not have used a 
credit score, as defined by section 609(f)(2)(A) of the FCRA, in taking 
any adverse action. In that case, a creditor may use Form C-3, deleting 
the heading and information about the consumer's credit score. A 
creditor may amend Form C-3, at its option, to add the additional 
headings and remove the references to a credit scoring system, even 
through the creditor did not use a credit score in taking adverse 
action. Form C-3 should help distinguish proprietary scores from credit 
scores obtained from consumer reporting agencies, even if both scores 
are not used in taking adverse action.
    If the creditor uses both a proprietary score that does not meet 
the definition of a credit score and a credit score from a consumer 
reporting agency in taking adverse action, the creditor is only 
required to disclose the credit score from the consumer reporting 
agency under section 1100F of the Dodd-Frank Act. The creditor may use 
the ``Information About Your Credit Score'' section of Form C-3 to 
disclose the credit bureau score. Likewise, if a creditor uses a credit 
score from a consumer reporting agency as an input to a proprietary 
score but the proprietary score itself is not a credit score as defined 
in section 609(f)(2)(A) of the FCRA, the creditor would disclose the 
credit score from the consumer reporting agency per the requirements of 
section 1100F of the Dodd-Frank Act. Again, the creditor may use the 
``Information About Your Credit Score'' section of Form C-3 to disclose 
the credit bureau score.
    In contrast, a creditor in taking adverse action may have used a 
proprietary score that only includes information obtained from a 
consumer reporting agency. In that case, the proprietary score would be 
a credit score under section 609(f)(2)(A) of the FCRA. In such cases, 
the creditor is required to comply with section 1100F of the Dodd-Frank 
Act and may use Form C-3. As noted in paragraph 3 of Appendix C, the 
model forms are illustrative and may not be appropriate for all 
creditors. Creditors should thus modify Form C-3 as necessary. 
Specifically, the creditor should modify the ``Information about Your 
Credit Score'' section in Form C-3 to reflect that the creditor did not 
obtain a credit score from a consumer reporting agency, but rather used 
a proprietary score that met the definition of a credit score under 
section 609(f)(2)(A) of the FCRA in taking adverse action. The creditor 
should disclose the value of the proprietary score, the date, the range 
of proprietary scores, and the key factors adversely affecting the 
consumer's proprietary score.
    Commenters also asked for guidance on what information to disclose 
under section 1100F of the Dodd-Frank Act when a creditor uses both a 
proprietary score that meets the definition of a credit score, and a 
credit score from a consumer reporting agency in taking adverse action. 
If the proprietary score is the basis for the adverse action, under 
Regulation B the creditor would be required to disclose the reasons the 
consumer did not score well compared to other applicants, for the 
proprietary score. See Sec.  202.9(a)(2)(i). The creditor may disclose 
those reasons in the ``Reasons for Denial of Credit'' section of Form 
C-3. In addition, under the FCRA the creditor must disclose one of the 
scores that it used in taking adverse action and may do so in the 
``Information About Your Credit Score'' section in Form C-3. If the 
creditor chooses to disclose the proprietary

[[Page 41595]]

score, it would amend Form C-3 as discussed above. If the creditor 
chooses to disclose the credit score from a consumer reporting agency, 
the creditor would disclose the value of the credit score, the date, 
the range of credit scores, and the key factors adversely affecting the 
consumer's credit score.
    Other comments on Form C-3. One commenter highlighted language in 
Form C-3 that describes a proprietary score as based on the repayment 
histories of a large number of the creditor's consumers. The commenter 
thought it potentially misleading to indicate that a proprietary score 
is only based on repayment histories rather than on an evaluation of 
different categories. The commenter asked that the Board revise Form C-
3 so that consumers clearly understand the difference between 
proprietary and other scores.
    This issue is outside the narrow scope of this rulemaking to revise 
the model forms consistent with section 1100F of the Dodd-Frank Act. 
Moreover, the model forms are illustrative and may not be appropriate 
for all creditors. See paragraph 3 of Appendix C. The instructions to 
the model forms provide examples of when a creditor should amend the 
forms to ensure that they accurately reflect the creditor's actual 
practices. See paragraph 4 of Appendix. If a proprietary score is not 
solely based on the repayment histories of a large number of the 
creditor's consumers, the creditor can amend the language to describe 
what the proprietary score is based on. Further, Form C-3 includes a 
disclosure of the principal reasons why a consumer's proprietary score 
is lower than the scores for the creditor's other consumers. This list 
of reasons may provide consumers with a fuller understanding of the 
difference between proprietary and other scores.

Form of the Notices

    As discussed above, the Board proposed to revise Forms C-1 through 
C-5 to incorporate disclosures required by section 1100F of the Dodd-
Frank Act and include, as applicable, a statement that the creditor 
obtained the consumer's credit score from a consumer reporting agency 
named in the notice, and used the score in making the credit decision. 
The proposed model notices also stated that a credit score is a number 
that reflects the information in the consumer's consumer report, and 
that the consumer's credit score can change, depending on how the 
information in the consumer report changes. The proposed model notices 
provided space for the creditor to include the content required under 
section 1100F of the Dodd-Frank Act that is specific to the consumer. 
This content includes: 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 a key factor).
    The Board proposed to include these new disclosures primarily in a 
narrative format. In addition, the Board proposed to add this 
additional information to the end of the model forms, after information 
related the reasons for why adverse action was taken, and a statement 
that the creditor obtained information from a consumer reporting 
agency.
    The Board received several comments on the format of the proposed 
model forms, as discussed in more detail below. For the reasons 
discussed below, the final rule retains the format of the credit score 
information in the model forms, as proposed.
    Order of content. An industry commenter asked that the credit score 
information precede information regarding the consumer report in the 
model forms. The final rule retains the order of the content of the 
model forms as proposed. The Board believes that it is appropriate to 
disclose the information related to consumer reports first because the 
primary purpose of the adverse action notices is to alert consumers 
that adverse action was taken as a result of their consumer reports.
    Further, in the proposed format the content logically progresses 
from more general consumer report information to more specific credit 
score information. In addition, because a creditor may still use Forms 
C-1 through C-5 when the creditor does not use the consumer's credit 
score in taking adverse action, providing the credit score information 
after the consumer report information will promote ease of use for 
creditors. Because the credit score information comes at the end of 
Forms C-1 through C-5, it may be easier for a creditor to delete that 
information from the forms in cases where the creditor did not use a 
credit score in taking adverse action.
    Disclosing credit score information on a separate document. Several 
industry commenters requested a model form that consumer reporting 
agencies could use to provide creditors the credit score information 
needed for adverse action notices under section 1100F of the Dodd-Frank 
Act. These commenters asked that creditors be permitted to attach the 
consumer reporting agency's form to their adverse action notices, and 
provide both documents to the consumer. These commenters did not 
believe that the creditor should be required to integrate the credit 
score information into its adverse action notice.
    Section 615(a)(1) of the FCRA requires a creditor to provide notice 
of adverse action to consumers against whom it takes adverse action 
based in whole or in part on information contained in a consumer 
report. Section 1100F of the Dodd-Frank Act amended Section 615(a) to 
require a creditor to provide such consumers credit score information. 
Providing a form with credit score information separately from an 
adverse action notice does not appear to be consistent with the 
legislation.
    Use of graphs or table formats. Some industry commenters requested 
that creditors be permitted to use a graph or table format to provide 
the information in the model forms without losing the safe harbor for 
compliance with Regulation B. These commenters asserted that graphs, 
tables, and other visual devices may be clearer and more useful to 
consumers.
    To comply with Regulation B, a creditor must provide the required 
disclosures in a clear and conspicuous manner, in a reasonably 
understandable format that does not obscure the required information. 
See Sec.  202.4(d)(1). Use of a different format from the model forms, 
such as by adding graphs or tables, could meet this standard for 
compliance with the regulation, but this would be determined on a case 
by case basis.

Substitute Notices and Combined Notices

    As discussed above, section 1100F of the Dodd-Frank Act amends 
section 615(a) of the FCRA to require creditors to disclose on FCRA 
adverse action notices a credit score used in taking any adverse action 
and information relating to that score. Creditors might, however, 
disclose credit score information to consumers to satisfy other 
disclosure requirements. Specifically, in January 2010, the Board and 
the Federal Trade Commission (the Agencies) published final rules to 
implement the risk-based pricing provisions in section 311 of the Fair 
and Accurate Credit Transactions Act of 2003 (FACT Act), which amended 
the FCRA (January 2010 Final Rule). 75 FR 2724. The January 2010 Final 
Rule generally requires a creditor to provide a risk-based pricing 
notice to a consumer when the creditor uses a consumer report to grant 
or extend credit to the consumer on material terms that are materially 
less favorable than

[[Page 41596]]

the most favorable terms available to a substantial proportion of 
consumers from or through that creditor. See Sec.  222.72; Sec.  640.3. 
The January 2010 Final Rule provides exceptions to the requirements to 
provide general risk-based pricing notices for persons that provide 
certain credit score disclosure notices to consumers who request credit 
(so called ``credit score disclosure exception notices''). See 
Sec. Sec.  222.74(d), (e), and (f); Sec. Sec.  640.5(d), (e), and (f). 
In addition, section 609(g) of the FCRA requires creditors to provide 
credit score information to consumers applying for loans secured by one 
to four units of residential real property.
    For loans secured by one to four units of residential real 
property, the credit score disclosure exemption notice would be 
required to be provided to the consumer concurrently and combined with 
the notice required by section 609(g) of the FCRA, but in any event, at 
or before consummation of a closed-end credit transaction or before the 
first transaction under an open-end credit plan. Sec.  222.74(d)(3). 
Section 609(g)(1) of the FCRA states that the notice required by that 
subsection must be provided to the consumer ``as soon as reasonably 
practicable.'' In the January 2010 Final Rule, the Agencies noted that 
industry practice is generally to provide the credit score disclosure 
within three business days of obtaining a credit score and the Agencies 
would expect the integrated disclosure generally would be provided 
within the same timeframe. 75 FR 2741. For loans not secured by one to 
four units of residential real property, the credit disclosure 
exemption notice must be provided to the consumer as soon as reasonably 
practicable after the credit score has been obtained, but in any event 
at or before consummation in the case of closed-end credit or before 
the first transaction is made under an open-end credit plan. Sec.  
222.74(e)(3).
    Some industry commenters asked the Board to clarify that if a 
creditor provides credit score exception notices or section 609 notices 
to consumers, the creditor would not be required to include the 
disclosures required by section 1100F of the Dodd-Frank Act in the 
adverse action notice. One industry commenter also requested that the 
Board clarify that a creditor is allowed to combine the section 609(g) 
notice with an adverse action notice. For the reasons discussed below, 
the Board does not believe a creditor would comply with the FCRA 
adverse action provisions in section 1100F by providing a credit score 
disclosure exception notice or section 609(g) notice. In addition, the 
Board does not believe that the 609(g) notice may be integrated into a 
FCRA adverse action notice.
    Substitute notices. One industry commenter asked the Board to 
clarify that if a creditor provides credit score disclosure exception 
notices in connection with all loan applications, the creditor would 
not be required to include the credit score disclosures required by 
section 1100F of the Dodd-Frank Act in the adverse action notice.
    In addition, one industry commenter suggested that if a creditor 
provides consumers with the disclosures required by section 609(g) of 
the FCRA, the creditor should not be required to disclose credit score 
information under section 1100F of the Dodd-Frank Act in the adverse 
action notice. This commenter noted that the credit score might change 
between the 609(g) disclosure and adverse action notice, leading to 
consumer confusion. The commenter argued that Congress likely did not 
intend consumers to receive multiple credit disclosures in connection 
with a single transaction.
    The Board does not believe a creditor would comply with the FCRA 
adverse action provisions by providing a credit score disclosure 
exception notice or section 609(g) notice. These notices provide 
different information and have different timing requirements than the 
adverse action notice. In addition, the credit score disclosed on the 
credit score disclosure exception notice or section 609(g) notice might 
not be the credit score used in taking adverse action. For example, for 
purposes of the credit score disclosure exception notice, if a person 
uses a credit score that was not created by a consumer reporting 
agency, such as a proprietary score, that person is permitted to 
disclose either the proprietary score or a credit score it obtained 
from an entity regularly engaged in the business of selling credit 
scores, even if the latter credit score was not used in the credit 
decision. Nonetheless, in that circumstance, the FCRA adverse action 
notice must contain the proprietary score under 1100F. As discussed 
above, if a creditor uses a proprietary ``credit'' score in taking 
adverse action and does not use a credit score from a consumer 
reporting agency, the creditor must disclose information about the 
proprietary score under section 1100F.
    Combined notices. One industry commenter requested that the Board 
clarify that a creditor is allowed to combine the section 609(g) notice 
with a FCRA adverse action notice. The Board does not believe a 
creditor would comply with the FCRA adverse action provisions by 
combining the section 609(g) notice with an adverse action notice for 
the reasons discussed above. In addition, the Board believes that 
allowing the section 609(g) notice to be combined with the adverse 
action notice might detract consumers from the primary purposes of the 
adverse action notice, which is to notify the consumer that adverse 
action has been taken.

Co-Applicants

    Several industry commenters asked who should receive an adverse 
action notice when a credit application involves multiple applicants. 
These commenters stated that applicants should not receive each other's 
credit scores. They also recommended adding language to the model forms 
to indicate that for co-applicants, the adverse action decision may be 
based on either or both of the applicants' credit information. They 
explained that such language would decrease consumer confusion, since 
an applicant with an excellent credit profile who receives an adverse 
action notice may not realize that the adverse action decision may have 
been made because of the co-applicant's credit profile.
    Section 202.9(f) of Regulation B permits a creditor to provide an 
adverse action notice to only one applicant, and requires a creditor to 
provide an adverse action notice to the primary applicant, when a 
primary applicant is readily apparent. In contrast, section 615(a) of 
the FCRA requires a creditor to provide the disclosures mandated by 
that section to ``any consumer'' against whom adverse action is taken, 
if the adverse action is based in whole or in part on information from 
a consumer report. The FCRA's reference to ``any consumer'' would seem 
to include co-applicants. Given privacy and customer relations 
concerns, the Board expects that creditors would generally provide 
separate FCRA adverse action notices to each applicant with only the 
individual's credit score on each notice.
    As discussed above, several commenters recommended adding language 
to the model forms to indicate that for co-applicants, the adverse 
action decision may be based on either or both of the applicants' 
credit information. The Board believes that providing this additional 
language on the model forms would complicate the disclosures without 
providing a substantial benefit to consumers. An applicant with strong 
credit who receives an adverse action notice will likely understand 
that the adverse action decision was based on the co-applicant's credit 
information or will contact the creditor to inquire.

[[Page 41597]]

Guarantors and Co-Signers

    An application may involve a guarantor or co-signer. Some industry 
commenters asked whether a guarantor or co-signer should receive an 
adverse action notice. These commenters also asked whether the 
guarantor's or co-signer's credit score should be disclosed to the 
applicant, where the creditor uses the guarantor's or co-signer's 
credit score in taking adverse action.
    Under section 701(d)(6) of the ECOA and Sec.  202.2(c) of 
Regulation B, only an applicant can experience adverse action. Further, 
a guarantor or co-signer is not deemed an applicant under Sec.  
202.2(e). Sections 603(k)(1)(A) and 603(k)(1)(B)(2) of the FCRA provide 
that adverse action has the same meaning for purposes of the FCRA as is 
provided in the ECOA and Regulation B in the context of a credit 
application. Therefore, a guarantor or co-signer would not receive an 
adverse action notice under the ECOA or the FCRA. The credit applicant 
would, however, receive an adverse action notice, even if the adverse 
action decision is made solely based on information in the guarantor's 
or co-signer's consumer report. Section 1100F of the Dodd-Frank Act 
does not address whether, in this circumstance, the adverse action 
notice received by an applicant under the FCRA should include a 
guarantor or co-signer's credit score. The Board does not believe, 
however, that Congress intended for an individual to receive another 
individual's credit score. Section 609(f)(2) of the FCRA associates a 
credit score with a particular individual. The Board accordingly 
believes that a guarantor or co-signer's credit score should not be 
disclosed to an applicant in an adverse action notice.

Multiple Scores

    Some creditors may obtain multiple credit scores from consumer 
reporting agencies in connection with their underwriting processes. A 
creditor may use one or more of those scores in taking adverse action. 
Section 1100F of the Dodd-Frank Act only requires a person to disclose 
a single credit score used in taking adverse action.
    When a creditor obtains multiple scores but only uses one in making 
the decision, the creditor must disclose the credit score that it used. 
Commenters asked what credit score or scores creditors should disclose 
when creditors use multiple scores in taking adverse action, for 
example, from different consumer reporting agencies. Section 1100F of 
the Dodd-Frank Act does not specify what credit score should be 
disclosed in such cases, but only requires a person to disclose a 
single credit score that is used by the person in making the credit 
decision. A creditor would comply with the statute by disclosing any of 
the credit scores that it used. The Board expects that creditors will 
have policies and procedures to determine which of the multiple credit 
scores was used in taking adverse action. For instance, a creditor 
could have policies and procedures specifying that: (1) When the 
creditor obtains or creates multiple credit scores but only uses one of 
those credit scores in taking adverse action, for example, by using the 
low, middle, high, or most recent score, the creditor would disclose 
that credit score and information relating to that credit score; and 
(2) when a creditor uses multiple credit scores in taking adverse 
action, for example, by computing the average of all the credit scores 
obtained, the creditor would disclose any one of those credit scores 
and information relating to the credit score.
    Because credit scoring models may differ considerably in nature and 
the range of scores used, consumers would not necessarily benefit if 
they receive and try to compare multiple scores. Disclosing multiple 
credit scores could confuse consumers who do not understand the 
differences, which might lessen the value of the section 1100F 
disclosures. Moreover, section 1078(a) of the Dodd-Frank Act requires 
the Consumer Financial Protection Bureau (CFPB) to conduct a study of 
the different credit scoring systems, and whether these variations 
disadvantage consumers. The CFPB's study might develop a record that 
could serve as the basis for reconsidering this issue in a future 
rulemaking.

Adverse Actions Not Limited to Credit

    An industry commenter asked whether credit score information under 
section 1100F of the Dodd-Frank Act must be disclosed in FCRA adverse 
action notices for non-lending products. This commenter notes that the 
definition of ``credit score'' for purposes of section 1100F of the 
Dodd-Frank Act refers to a credit score ``used by a person who makes or 
arranges a loan.'' The commenter asserted argued that Congress intended 
to limit the section 1100F disclosures to credit decisions.
    Section 202.2(c) of the ECOA limits the definition of adverse 
action to decisions regarding credit. The FCRA, however, does not 
include such a limitation. See section 603(k)(1) of the FCRA. The FCRA 
therefore applies to adverse action decisions related to credit, but 
also decisions regarding, for example, a deposit account, insurance 
product, or employment. Although a credit score may generally be used 
in making or arranging loans, a credit score may also be used in taking 
adverse action not related to credit. The Board believes that a person 
would need to disclose a credit score obtained from a consumer 
reporting agency as part of the adverse action notice as set forth in 
section 1100F of the Dodd Frank Act, even if the person used the credit 
score to take adverse action for a non-lending product. In requiring 
credit score disclosures, section 1100F does not state that the credit 
score disclosures are only required for adverse action decisions 
related to credit.

Implementation Date

    Some industry commenters asked that the Board delay the rule's 
implementation date by 6 months to at least 12 months. One commenter 
suggested that the Board stay the rulemaking, and let the CFPB finalize 
the rule.\3\ Another commenter requested that creditors should receive 
a safe harbor for using the proposed model forms until creditors can 
implement the requirements in the final rule.
---------------------------------------------------------------------------

    \3\ Rule writing authority under the FCRA will transfer to the 
CFPB on July 21, 2011.
---------------------------------------------------------------------------

    Section 1100F of the Dodd-Frank Act is self-effectuating and will 
become legally effective on July 21, 2011, even if there are no 
implementing rules or model forms. To provide guidance to institutions 
in establishing their compliance programs, this final rule will become 
effective 30 days after the date of publication in the Federal 
Register.

III. Regulatory Analysis

A. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (PRA) (44 
U.S.C. 3501-3521; 5 CFR part 1320 Appendix A.1), the Board reviewed the 
final rulemaking under the authority delegated to the Board by the 
Office of Management and Budget (OMB). The collection of information 
that is required by this final rulemaking is found in 12 CFR part 202. 
In addition, as permitted by the PRA, the Board will extend for three 
years the current recordkeeping and disclosure requirements in 
connection with Regulation B. The Board may not conduct or sponsor, and 
an organization is not required to respond to, this information 
collection unless it displays a currently valid OMB control number. The 
OMB control number is 7100-0201.
    Section 703(a)(1) of the Equal Credit Opportunity Act (15 U.S.C. 
1691b(a)(1)) authorizes the Board to issue regulations

[[Page 41598]]

to carry out the provisions of the Act. The purpose of the Act is to 
ensure that credit is made available to all creditworthy customers 
without discrimination on the basis of race, color, religion, national 
origin, sex, marital status, age (provided the applicant has the 
capacity to contract), receipt of public assistance income, or the fact 
that the applicant has in good faith exercised any right under the 
Consumer Credit Protection Act (15 U.S.C. 1600 et seq.). This 
information collection is mandatory.
    Regulation B applies to all types of creditors, not just State 
member banks. However, under the PRA, the Board accounts for the burden 
of the paperwork associated with the regulation only for entities that 
are supervised by the Board. Appendix A of Regulation B defines these 
creditors as State member banks, branches and agencies of foreign banks 
(other than federal branches, federal agencies, and insured state 
branches of foreign banks), commercial lending companies owned or 
controlled by foreign banks, and organizations operating under section 
25 or 25A of the Federal Reserve Act. Other federal agencies account 
for the paperwork burden for the institutions they supervise. Creditors 
are required to retain records for 12 to 25 months as evidence of 
compliance.
    As discussed above, on March 15, 2011, the Board published in the 
Federal Register a notice of proposed rulemaking that is consistent 
with new content requirements in section 615(a) of the FCRA that were 
added by section 1100F of the Dodd-Frank Act. 76 FR 13896. The PRA 
comment period expired on May 16, 2011.
    In the proposal, the Board estimated that respondents potentially 
affected by the additional notice would take, on average, 16 hours (2 
business days) to update their systems and modify model notices to 
comply with the proposed requirements. The Board recognized that the 
amount of time needed for any particular creditor subject to the 
proposed requirements may be higher or lower, but believed this average 
figure was a reasonable estimate.
    Several industry commenters believed that the Board underestimated 
the compliance burden of the proposed rule. These commenters asserted 
that compliance would require between 2 weeks and 8,000 hours.
    Based on these comments, the Board is inclined to agree that some 
additional time beyond 16 hours may be needed. The Board, therefore, 
has revised upward its prior burden estimate. The Board believes that 
32 hours (4 business days) is a reasonable estimate of the average 
amount of time to modify existing database systems to incorporate these 
new requirements. In addition, an industry commenter asked that the 
Board clarify whether the Board proposed to extend current 
recordkeeping requirements for 3 years, or to lengthen current 
recordkeeping requirements. As explained in the proposed rule, the 
Board is extending current recordkeeping and disclosure requirements 
for 3 years.
    Entities affected by this final rule are already familiar with the 
existing adverse action provisions. It should not be overly burdensome 
to persons using a credit score when making the decision requiring an 
adverse action notice to add additional information to that notice. In 
addition, the Board has provided model notices that should 
significantly reduce the cost of compliance with the final rule.

B. Regulatory Flexibility Act

    The Board prepared an initial regulatory flexibility analysis under 
the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) in 
connection with the proposed rule. The final rule covers certain banks, 
other depository institutions, and non-bank entities that take adverse 
action against consumers. The Small Business Administration (SBA) 
establishes size standards that define which entities are small 
businesses for purposes of the RFA.\4\ The size standard to be 
considered a small business is: $175 million or less in assets for 
banks and other depository institutions; and $7 million or less in 
annual revenues for the majority of non-bank entities that are likely 
to be subject to the final rule. Under section 605(b) of the RFA, 5 
U.S.C. 605(b), the regulatory flexibility analysis otherwise required 
under section 604 of the RFA is not required if an agency certifies, 
along with a statement providing the factual basis for such 
certification, that the final rule will not have a significant economic 
impact on a substantial number of small entities. The Board hereby 
certifies that the final rule will not have a significant economic 
impact on a substantial number of small business entities. The Board 
recognizes that the final rule will affect some small business 
entities; however the Board does not expect that a substantial number 
of small businesses will be affected or that the final rule will have a 
significant economic impact on them, particularly in light of the 
information already required to be disclosed under section 615(a) of 
the FCRA. Nonetheless, the Board has decided to publish a final 
regulatory flexibility analysis with the final rule and has prepared 
the following analysis:
---------------------------------------------------------------------------

    \4\ U.S. Small Business Administration, Table of Small Business 
Size Standards Matched to North American Industry Classification 
System Codes, available at https://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.
---------------------------------------------------------------------------

1. Reasons for the Final Rule
    Section 1100F of the Dodd-Frank Act amends section 615(a) of the 
FCRA to require persons to disclose a credit score and information 
relating to that credit score in adverse action notices when the person 
uses a credit score in taking adverse action. Specifically, a person 
must disclose, in addition to the information currently required by 
section 615(a) of the FCRA: (1) A numerical credit score used in making 
the credit decision; (2) the range of possible scores under the model 
used; (3) 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 a key factor); (4) the date on 
which the credit score was created; and (5) the name of the person or 
entity that provided the credit score. The effective date of these 
amendments is July 21, 2011.
    Certain model notices in Regulation B include the content required 
by both the ECOA and the FCRA adverse action provisions, so that 
creditors can use the model notices to comply with t