Changes in the Fair Credit Reporting Act (FCRA) - A Creative Services, Inc. Compliance Corner Article

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Changes in the Fair Credit Reporting Act (FCRA)

07.22.11

Creative Services, Inc. (“CSI”) recently received a number of inquiries about changes in the Fair Credit Reporting Act (FCRA) that pertain to the use of credit reports for employment purposes. As an ongoing service to our clients we periodically provide Client Alerts that inform you of important changes in federal or state laws that might impact your background screening services. We do not provide updates on those changes that do not impact our clients. However, because there is some confusion regarding the applicability of a recent change in the FCRA, we are sending you this advisory email.

Please NOTE: CSI does not typically request or provide credit scores as part of our standard Credit History employment screening product. Therefore, unless your company receives credit reports as part of your background screening services, AND the credit report contains a credit score, this recent change in the FCRA does not apply to you.

Effective July 21, 2011, the FCRA adverse-action notices must disclose any numerical credit score that contributed to the adverse action. The FCRA requires a person taking adverse action based in whole or in part on a consumer report to provide an adverse-action notice. Section 1100F of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) amended Section 615(a) of the FCRA to require users of credit scores to include those scores, and related information, in adverse-action notices provided to consumers. The requirement to disclose credit score information in FCRA adverse-action notices also applies to adverse-action decisions not related to credit. Consequently, when a user takes any adverse action based in whole or in part on information contained in a consumer report, regardless of the weight of the credit score in the decision, the user must provide the consumer with the following:

  • The credit score;
  • The range of possible credit scores under the model used;
  • All of the key factors that adversely affected the credit score (not to exceed four factors, unless one factor is the number of inquiries made with respect to the report, in which case the key factors may not exceed five)
  • The date on which the credit score was created; and
  • The name of the person or entity that provided the credit score.

For more information we encourage you to review the “Forty Years of Experience with the Fair Credit Reporting Act” report that the FTC issued July 20, 2011 and is available at http://www.ftc.gov/os/2011/07/110720fcrareport.pdf. This report is the most up-to-date FTC guidance on interpreting the FCRA.

If you have any questions regarding the applicability of this change to your own situation, we encourage you to consult legal counsel. As always, we are available to answer questions you may have regarding the background screening services that you receive from CSI. Please contact Jack Nichols, Director and General Counsel at 800-227-0002.

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