Credit application gets even more complicated

Donna Harris covers automotive retailing for Automotive News

Another federal disclosure requirement kicked in July 21, under the Dodd-Frank Act. This regulation concerns adverse-action notices, the notices that dealers and lenders send to customers telling them why their credit was rejected.

Now adverse-action notices have to include the consumer's credit score; the range of possible credit scores under the model used to generate the score; the key factors affecting the customer's credit score; the date the score was generated; and the entity that provided the score.

The disclosures are similar to the ones required under the Risk-Based Pricing Rule, which took effect Jan. 1. That rule was so complex that federal rule-makers provided businesses such as car dealers with a simpler alternative — the exception notice — to help them comply.

There's no such luck with the adverse action notice, though software vendors are helping dealers meet the new requirement by incorporating the changes into their existing programs.

The federal government continues to complicate your job. It's no longer as easy as pulling a credit bureau report.