Full text of Federal Reserve Bank of New York Circulars : 7924. Proposed Revision of Regulation B Implementing the 1976 Amendments to the Equal Credit Opportunity Act

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

FEDERAL RESERVE BANK
OF NEW YORK
r Circular No. 7 9 2 4 n
L
July 28, 1976
J

PROPOSED REVISION OF REGULATION B IMPLEMENTING THE 1976 AMENDMENTS
TO THE EQUAL CREDIT OPPORTUNITY ACT
T o A l l M e m b e r B a n k s , a n d O th e r s C o n cern ed ,

in the Second Federal Reserve D istrict:

Following is the text of a statement issued July 15 by the Board of Governors of the Federal
Reserve System:
T he B oard of G overnors of the F ederal R eserve System today proposed for public comment a revision of
its R egulation B, to im plem ent the 1976 A m endm ents to the Equal Credit O pportunity Act.
T he B oard will receive w ritten com m ent on its proposals through Septem ber 1, 1976. T he B oard also
announced it will hold a hearing on the proposals on A u g u st 12 and 13, 1976.
T he 1976 A m endm ents to the Act prohibit discrim ination in extensions of credit based on race, color,
religion, national origin, age, receipt of income from public assistance program s and good faith exercise of rights
under the C onsum er C redit P rotection Act. T he A m endm ents become effective M arch 23, 1977. T he original
E C O A , effective last O ctober 28, prohibited discrim ination on the basis of sex or m arital status.
T he B o ard ’s Regulation B, im plem enting the original Equal C redit O pportunity A ct, and the proposed
revision of the R egulation B announced today, were w ritten at the direction of Congress. T he proposed
revision of the regulation would supersede the existing Regulation B. H ow ever, the existing regulation
rem ains in effect until the effective date of the new am endm ents next M arch 23, and creditors are required
to comply w ith it until then.
T he B oard s regulation would continue to be enforced by the Federal agencies designated in the A ct.1
T he principal provisions of Regulation B, as proposed, would b e :

# Coverage: T he regulation w ould cover anyone who regularly participates— in the ordinary course of
business— in decisions w hether or not to extend credit. T his would include anyone, other than those who only
occasionally extend credit, who provides or extends credit and participates in the credit decision.
S e x a n d m a r i t a l s t a t u s : T he provisions of the existing regulation, dealing only w ith prohibitions of dis­
crim ination in extensions of credit based on sex and m arital status rem ain essentially unchanged in the p ro ­
posed revision of R egulation B.
A p p l i c a t i o n s : Since many creditors, particularly small creditors, have had difficulty designing credit
application form s, the B oard proposed to assist them by supplying model forms. C reditors who used the
model form s would be assured of being in compliance. H ow ever, creditors could continue to design their own
forms, or could revise the model form s, but they would then bear responsibility for being in compliance w ith

the inform ation requirem ents of the regulation.
A d v e r s e a c t i o n : T his is a new definition in the B oard's proposed revised Regulation B. It describes
actions th at would require a creditor to provide an applicant with a statem ent of reasons for an adverse action.
It also would set in m otion fulfillment of requirem ents relating to w ritten notice of any adverse action taken
notice of rights under E C O A and the requirem ents of the proposed regulation concerning retention of records!

T he B oard proposed definitions both of w hat constitutes an adverse action, and what does not.
A d v e r s e a c tio n h a s o c c u r r e d :

— if a creditor refuses to g ran t credit in an am ount and on term s acceptable to the applicant.
1 Enforcement agencies a re : Comptroller of the Currency, Board of Directors




n f th e

P erW o i

u

t

r

r

— if the creditor term inates an account or m akes an unfavorable change in the term s of an account so
long as th e action does not affect all or a substantial portion of a class of the cred ito r’s accounts.
— if an applicant has intentionally inform ed a cred ito r th at the applicant w ants his or her credit limit to be
increased and the creditor refuses.
A d v e r s e a c tio n h a s n o t o c c u r r e d :

— if the applicant accepts am ounts and term s of credit different from those applied for.
— if a cred ito r’s action is due to inactivity, default or delinquency by an applicant.
— if a creditor who does not raise an applicant’s credit limit has not been made aw are that the applicant
w ished to increase the limit. F o r instance, a refusal to authorize a point-of-sale transaction th at exceeds a p re­
viously established credit lim it w ould not be an adverse action.
N o t i f i c a t i o n o f a c t i o n a n d s t a t e m e n t o f r e a s o n s : T h e Board proposed, to carry out requirem ents of the
revised A ct, th at w henever an adverse action has been taken the applicant should receive notice of the action,
a statem ent telling the applicant of rights under E C O A and a statem ent of specific reasons for the adverse
action (o r disclosure of the applicant’s right to get such an explanation). T he content of all the notices is
substantially the same as in the existing regulation, but they are to be provided together in o rder to enhance
public understanding.

A change from the existing regulation is a proposal th at the statem ent of rights under E C O A should
be provided only to persons against whom an adverse action has been taken, rath er than supplying it to all
applicants.
T he proposal provides a sam ple notice of E C O A rights. U nlike the existing regulation, it need not be
used verbatim but m ay be in language substantially the same as the language of the sample notice. T he
te x t of the proposed sample notice is identical to the existing notice, except th at the prohibitions of the 1976
A m endm ents to the A ct have been added.
T h e B oard also provided a sample statem ent of specific reasons for adverse action. T his is sim ilar to the
existing statem ent of reasons for adverse action except for a change in the title, to indicate that it m ust be
used in all cases of adverse action and not, as at present, only in cases of denial or term ination of credit.
C reditors who use the sample form supplied w ould be in compliance w ith the regulation and the Act.
T he A ct provides th a t creditors who received 150 or fewer applications for credit in the preceding year
be allowed to give the above notices orally.
R e t e n t i o n o f r e c o r d s : R equirem ents under the B oard’s proposed revision of Regulation B for the
preservation of records are essentially the same as in the existing regulation. T he chief difference is that
the retention period proposed is 25 m onths (since the am ended A ct establishes a statute of lim itations of 24
m onths) instead of the present 15 m onths.
A g e : T o im plem ent the prohibition of the A ct against assigning negative weight to advancing age of
an applicant for credit, the B oard proposed that elderly applicants capable of contracting m ust not be assigned
a low er score, on account of age, than applicants who get the best score for age. T h at is, if an applicant is 65
and the cred ito r assigns the highest value for age to applicants of 55 to 60 years, the 65-year-old applicant
m ust get at least as good a score on account of age as do applicants of 55 to 60 years. H ow ever, advancing
age could be used as a favorable element.

T he am ended A ct provides th at a creditor may consider age in a properly developed empirically derivec
credit system — credit scoring for age. T he B oard proposed that such a system be defined as one that predicts
on the basis of a num erical score, an applicant’s probable willingness and financial ability to repay the requestet
credit. T he score w ould be derived from points assigned to key questions determ ined and weighted ii
accordance w ith past experience w ith applicants for credit. T he B oard also proposed standards for wha
would constitute a dem onstrably and statistically sound credit system as one developed by the applicatioi
of, and in accordance w ith, generally accepted sam pling procedures and principles, having a statisticall
significant relation to credit risk under accepted standards of analysis, and developed for the purpose c
predicting the creditw orthiness of applicants in relation to the legitim ate business interests of the creditoi
such as to m inim ize bad debt losses and operating expenses. (Section 202.2(o ) ).
Inquiries may be m ade concerning age in all cases, but the use of this inform ation would be re stric ts
u n d er the B o ard ’s d raft rules, to the assessm ent of creditw orthiness and may not be used arb itrarily to ci
off o r dim inish credit due to an applicant’s age.



2

T he proposal would forbid creditors to require a reapplication, change the term s of an account o r te r­
m inate an account because a person reaches a certain age or retires, if the applicant has not dem onstrated
unw illingness o r inability to repay.
T he B oard specified th at considerations of age would apply only to natural persons, not to businesses.
C r e d i t o r s ’ r e q u e s t f o r i n f o r m a t i o n : W ith two additions, to conform to the 1976 A m endm ents to the A ct,
the B oard s proposed rules w ith respect to cred ito rs’ requests for inform ation are approxim ately the same
as in the existing regulation.

T he tw o new rules proposed a r e :
1. E xcept for authorized data g ath erin g purposes and special purpose credit program s, a creditor m ay not
request inform ation on an application as to race, color, religion, sex or national origin of the applicant, or others
associated w ith the applicant in the application.
2. A creditor may not request inform ation concerning the exercise by the applicant of any rig h t under
the C onsum er C redit P rotection Act.
R u l e s f o r t h e u s e o f i n f o r m a t i o n o b t a i n e d : In m aking its proposals for the use of inform ation obtained
the B oard noted th a t in the legislative history of the am ended Act, the courts are directed to take account
of the “effects” test developed in em ploym ent discrim ination cases. T he Board interprets the use of an “effects”
test w ith respect to credit to m ean :

“ . . . the use of certain inform ation in determ ining creditw orthiness, even though such inform ation is
not specifically proscribed, m ay violate the am ended A ct if the use of th at inform ation has the effect of
denying credit to (a substantial portio n ) of a class of persons protected by the A ct . . . unless the credi­
to r is able to establish th at the inform ation has a m anifest relationship to creditw orthiness.”
E ven then, the B oard s a id :
. . . if an aggrieved applicant could show th at a creditor could have used a less discrim inatory m ethod
which would serve the cred ito r’s need to evaluate creditw orthiness as well as the challenged method,
a violation m ay be found to ex ist.”
S p e c i a l p u r p o s e c r e d i t p r o g r a m s : In general, this proposed new section of the regulation would perm it
otherw ise discrim inatory actions by creditors who offer certain types of special credit assistance program s
intended to achieve social or economic goals. In such circum stances the creditor may refuse to extend credit
solely because an applicant does not qualify under the special requirem ents of a particular program recog­
nized under the proposed regulation. T hese in clu d e:

1. ^ C redit assistance program s expressly authorized by F ederal or S tate law for the benefit of an
economically disadvantaged class of persons.
2. C redit assistance program s adm inistered by a non-profit organization (as defined by the Internal
R evenue Code, Section 5 0 1 (c ) as am ended), for the benefit of its mem bers or for the benefit of an econo­
mically disadvantaged class of persons.
3. A ny special purpose credit program offered by a for-profit organization to meet special social needs
*hat).are *n accorc* w ith the provisions of the regulation regarding such program s. (Section 202 8 ( a ) ( 3 )
(l) ( n ) and ( l i i ) ).
w v '
I n f o r m a t i o n o b t a i n e d f o r m o n i t o r i n g p u r p o s e s : Solely for the
data should be obtained, and on how and w hat the data should
d raft revised regulation th at would, if adopted, require real estate
applicants to facilitate enforcem ent of the Equal C redit O pportunity

purpose of generating com m ent on w hether
be, the Board included a proposal in its
creditors to note certain characteristics of
Act.

T h e B oard invited com m ent on the following issues for its consideration in the event th at requirem ents for
data g athering are adopted as a m eans of m onitoring compliance w ith the E C O A .
1. Should such a requirem ent be limited to credit extended for residential real estate?
2.

Should it be lim ited to notation of race, or sex, or both, or should other types of prohibited discrim i­
nation such as religion, also be noted ?




3
A

3. W h at system of classification should be used to note race— ‘W h ite ” and “ N on-W hite,” self descrip­
tion by the applicant, or a system using such term s as “A m erican In d ian ,” “A laskan N ative,”
“A sian ,” “ Pacific Islan d er,” “ Black,” “ H isp an ic” and “ W h ite” ?
4.

Should any required inquiries be incorporated in the application form, or be on a separate sheet ?

5. Should applicants be required to answ er questions as to race and sex? If the applicant declines, should
the creditor be required to note his own observations? Should a personal interview be required as
p a rt of the application for the purpose of this notation for m onitoring compliance ? A re there other
preferable approaches to m onitoring compliance ?
6.

Should economic as well as dem ographic data be gathered, and if so, w hat economic data? W hat
economic data do creditors norm ally obtain ? Should creditors be required to note income, num ber
of dependents, etc?

T he B oard included for com m ent an illustrative exam ple of possible regulatory language that could be
used to institute a requirem ent th at creditors m ust obtain inform ation on the characteristics of persons apply­
ing for real estate credit, as a m eans of m onitoring compliance.
E x e m p t i o n s : T h e am ended A ct provides that the Board may exem pt from one or more provisions of the
A ct credit transactions “not prim arily for personal, family or household purposes” if the B oard finds that
such an exem ption would not interfere w ith carrying out the purposes of the Act.

T h e Board, consequently, requested com m ent on a series of questions as to w hat classes of credit tra n s ­
actions, if any, should be exem pted. T hese questions a r e :
Should an exem ption be related to the am ount of a borrow er’s or cred ito r’s assets? O r to the am ount
of the transaction (fo r exam ple, one involving an am ount of $200,000 or m ore or $500,000 or m ore) ? O r
to the cred ito r’s volum e of business? W h a t other factors may be relevant in distinguishing between those
classes of transactions th a t should rem ain subject to the am ended A ct and those which m ay be exem pted
in whole or in p a rt? F o r exam ple, should non-consum er transactions be treated differently regarding reten ­
tion of records, notification of action taken, reasons for adverse action, and other procedural requirem ents?
In addition to possible exem ptions for business credit, the B oard invited com m ent on the question as
to how securities, incidental and utilities credit should be handled.
i n c o n s i s t e n t S t a t e l a w s : T h e am ended Act authorizes the B oard to determ ine if State laws dealing with
credit discrim ination are inconsistent with Federal law or regulation. Due to the great variety of State laws on
this subject, the B oard proposed th at all State laws on credit discrim ination should be considered inconsistent
until review ed by the B oard and determ ined to be inconsistent or consistent. L ater supplem ents to the B oard’s
proposal, to be p repared before the effective date of the A ct and the regulation (M arch 23, 1977) will set
forth criteria the B oard will use in m aking its determ inations and will provide procedures by which State
officials m ay seek review of th eir laws.

Printed below is an excerpt from the Federal Register (Vol. 41, No. 140) of July 20, 1976,
containing the text of the proposal. Comments thereon should be submitted by September 1, 1976,
and may be sent to our Bank Regulations Department.
P

aul

A. V

olcker,

President.
FEDERAL RESERVE SYSTEM
[ 12 CFR Part 202 ]
| D o c k e t N o. R -0 0 3 1 |

EQUAL CREDIT OPPORTUNITY
Notice of Proposed Rulemaking and
Notice of Hearing

The Board of Governors is considering
amendments to Regulation B, Equal
Credit Opportunity (12 CFR 202), to
implement the 1976 Amendments to the
Equal Credit Opportunity Act (Pub. L.
94-239). The original Equal Credit Op­
portunity Act (hereinafter referred to as




the “Act”), which went into effect on
October 28, 1975, prohibits discrimina­
tion in any aspect of a credit transaction
on the basis of sex or marital status. The
1976 Amendments to the Act were signed
into law on March 23, 1976, and became
effective on March 23, 1977. They extend
the Act’s prohibition of discrimination
to include discrimination based on race,
color, religion, national origin, age (pro­
vided the applicant has the capacity to
contract), receipt of income from a pub­
lic assistance program and the good faith
exercise of rights under the Consumer
Credit Protection Act. Since the Amend­
ments substantially change the Act,

numerous changes in existing Regulati
B are necessary.
The existing regulation remains in c
feet, however, until March 23, 1977, a
creditors are required to comply with
provisions until that time.
On April 27, 1976, the Board helc
preliminary hearing to receive put
comments and suggestions relating
implementation of the Amendmer
The Board will hold a hearing on Aug
12 and 13 on the p r o p o s e d amendme
to Regulation B.

REGISTER, V O l. 41, NO. 140— TUESDAY, JULY 20,

4

1976

S e c t io n

202.1—A u t h o r i t y ,

fo rcem en t,

S cope, E n ­
P e n a l t ie s a n d L i a b il it ie s

This section includes material con­
tained in §§ 202.1, 202.12 and 202.13 of
the existing regulation.
S e c t i o n 202.2— D e f i n i t i o n s a n d R u l e s
of

C o n s t r u c t io n

Section 202.2(a)—Definition of "Ac­
count". The Board proposes a minor

change in the definition in existing Reg­
ulation B to clarify that, when the word
“use” is employed in relation to the word
"account” in the regulation, it refers only
to open end credit accounts.
Section 202.2(b)—Definition of "Act” .

The definition of Act is unchanged from
existing Regulation B, except to substi­
tute for the statutory citation a reference
indicating that the Equal Credit Oppor­
tunity Act is Title VII of the Consumer
Credit Protection Act, as amended.
Section 202.2(c)—Definition of "Ad­
verse Action". This is a new definition. It

is drawn from section 701(d) (6) of the
amended Act. The definition describes
the actions of a creditor which will trig­
ger the requirement imposed by section
701(d)(2) of the amended Act to pro­
vide an applicant against whom adverse
action is taken with a statement of rea­
sons for the action. In addition, the de­
finition sets in motion the requirements
of § 202.9(b) of the proposed regulation
relating to written notice of the ad­
verse action taken and the ECOA notice,
and the requirement under § 202.12(b) of
the proposed regulation to retain records.
Under the proposed definition, adverse
action occurs if a creditor refuses to
grant credit in an amount and on terms
acceptable to the applicant. Thus, a re­
fusal to grant the amount of credit or the
terms requested is not adverse action if
the applicant accepts the amount and
terms offered. An additional point to
note is th at adverse action as defined in
section 701(d)(6) of the amended Act
includes not only unfavorable action at
the time of application but also unfavor­
able action after the initial credit exten­
sion. Hence, adverse action also occurs if
the creditor terminates an account or
makes an unfavorable change in the
terms of an account where the creditor’s
action does not affect all or a substantial
portion of a class of the creditor’s ac­
counts. The phrase “or an unfavorable
change in the terms of an account
which does not affect all or a substantial
>ortion of a class of the creditor’s ac­
counts” allows a creditor to make a
change in the terms of all of its open end
iccounts or in a class of those accounts
such as its credit card acounts but not
ts overdraft loan accounts) without the
change being deemed adverse action. As
>roposed, adverse action also includes a
efusal to increase the amount of credit
available to an applicant who has inormed the creditor that the request for
uch increase is intentional. Under this
tandard, a refusal to increase the credit
[mit of an applicant who has applied
or the increase in accordance with the
reditor’s customary application proedures would be adverse action.




The proposed definition also indicates
what action does not constitute adverse
action. Adverse action does not occur if
an applicant agrees to an unfavorable
change in the terms of the acoount. Thus,
an inrease in the annual percentage rate
pursuant to the terms of a variable in­
terest rate, or the elimination of a pre­
ferred annual percentage rate upon
termination of employment pursuant to
the agreement establishing the preferred
rate would not be adverse action. Nor
does adverse action occur if a creditor’s
action is taken because of inactivity, de­
fault, or delinquency by an applicant. A
creditor may terminate an account or de­
cline to renew a credit card because of
non-use in acordance with its customary
standards for such action, refuse to re­
finance a loan which is in default, or re­
fuse to authorize credit pursuant to a
credit card which has been revoked for
nonpayment without taking adverse ac­
tion. Finally, adverse action does not oc­
cur if the creditor has not been made
aware that the applicant wishes to in­
crease a previously established credit
limit. Under this exclusion, a refusal to
authorize a point-of-sale transaction
that exceeds an existing credit limit for
the applicant would not be adverse
action.

Board believes th at defining a completed
application in this fashion is a reason­
able interpretation of the applicable
statutory language and th at the defini­
tion obviates the need to specify different
notification periods for different situa­
tions.
Section
202.2(g)—Definition
of
"Board". This la a new definition in­

corporating the statutory definition of
Board in section 702(c) of the amended
Act.
Section 202.2(h)—Definition of “Con­
sumer Credit” , This definition is sub­
stantially similar to th at in existing Reg­
ulation B, but the phrase “offered o r '
has been deleted since section 702(d)
of the amended Act defines credit in
terms of an actual debt, and the con­
cept of offering credit is encompassed
in the definition of credit transaction.
Section 202.2(i)— Definition of “ Con­
tractually Liable". The Board proposes

to delete the words “having signed” from
this definition as it appears in existing
Regulation B. The Board believes th at
this proposal does not constitute a sub­
stantive change and would underscore
the point that the definition includes
those situations in which the use of a
credit card by a person pursuant to terms
made known to the user imposes liability
Section 202.2(d)—Definition of "Age”. upon that person for all debts arising
This is a new definition. It indicates on the account, even though th at per­
that the amended Act’s protection son has not actually signed an agree­
against discrimination based on age ex­ ment with the card-issuing creditor.
Section
202.2 (j) —Definition
of
tends only to natural persons and not to
"Credit” . Except for minor editorial
business entities.
Section 202.2(e)—Definition of “ Ap­ changes, this definition is identical to
plicant". The Board proposes a minor that in existing Regulation B.
Section 202.2(h)—Definition of "Credit
editorial change in the definition of ap­
plicant in existing Regulation B to ex­ Card” . This definition is Identical to th at
press more succinctly the fact th at the in existing Regulation B.
Section 202.2(1)—Definition of "Credi­
term includes both a person who requests
credit and a debtor. The Board also pro­ tor” . The Board proposes to combine in
poses to add the phrase “and includes this definition the definitions of “a r­
any person who is or may be contrac­ range for the extension of credit”
tually liable with respect to an exten­ (§ 202.3(e)) and “creditor” (§ 202.3(j))
sion of credit” in order to make clear as they appear in existing Regulation B
that the amended Act’s protection by defining a creditor as anyone who reg­
against discrimination on a prohibited ularly participates in the decision of
basis extends to persons such as whether or not to extend credit. Thus,
guarantors.
any person who regularly provides or ex­
Section 202.2(f)—Definition of "Ap­ tends credit and participates in the credit
plication". The definition of application decision is a creditor, unless that per­
remains substantially unchanged from son’s participation is limited to honoring
a credit card. The Board also proposes to
that in existing Regulation B.
The Board proposes to add a new defi­ add the phrase “in the ordinary course of
nition of a “completed application for business” before the word “regularly."
credit” in accordance with section 701 The Board believes that this effectuates
(d)(1) of the amended Act, which re­ the intent of the Congress to exclude
quires a creditor to notify an applicant from the class of covered creditors those
of its action on the application within persons who only occasionally extend
30 days, or such longer reasonable time credit. As in existing Regulation B, as­
as set by the Board, after receipt of a signee, transferees or subrogees who
completed application for credit. The participate in the credit decision are
definition indicates that an application creditors, but under the proposal, such
is not to be considered complete until a persons would not be liable for a violation
creditor has had a reasonable opportu­ of the amended Act or the regulation by
nity to obtain all of the information their assignor, transferor or subrogor if
that it regularly obtains and employs they did not know or have reasonable
in evaluating the type of application in­ notice of the violation.
volved, such as credit reports, any ad­
Section
202.3 (m ) —Definitioji
of
ditional information from the applicant, "Credit Transaction". The Board pro­
and any necessary approvals by govern­ poses to add the phrase “in connection
mental agencies. The last clause of the with a prospective or existing extension
definition precludes a creditor from pur­ of credit” to the definition of credit tran ­
posefully delaying an application. The saction as it appears in existing Regula-

5

r

tlon B to emphasize the subsequent
language In both the existing and pro­
posed definition: “including * * *
solicitation of prospective applications by
advertising or other means * * *” The
Board also proposes to add the phrase
“revocation, alteration or termination of
credit” to enumerate further the aspects
of a credit transaction that are covered.
The Board does not believe that these
additions effect any substantive change
from the definition in existing Regula­
tion B.
Section 202.2in )—Definition of “ Dis­
criminate Against An Applicant” . This

definition is substantially similar to the
definition in existing Regulation B. The
Board proposes to delete the phrase “on
the basis of sex or marital status” be­
cause, under the amended Act, a creditor
may not discriminate on other bases be­
sides sex and marital status.
Section 202.2(o)—Definition of “Em­
pirically Derived Credit System” . Under
section 701(b) (3) of the amended Act, a
creditor may consider age in an empiri­
cally derived credit system, if such system
is demonstrably and statistically sound
as determined in accordance with stand­
ards prescribed by the Board. The pro­
posed definition represents the Board’s
interpretation of the statutory language
and its understanding of the steps neces­
sary to insure the statistical validity and
predictive ability of such a system.
The proposal first defines what con­
stitutes an empirically derived credit
system. Such a system is one that pre­
dicts, on the basis of a numerical score,
an applicant’s probable willingness and
financial ability to repay the requested
credit. The score is derived from the
points assigned to the applicant’s answers
to key questions on the application. The
key questions are determined and
weighted in accordance with a creditor’s
experience with past applicants, includ­
ing those who repaid as agreed, or repaid
slowly, or did not repay at all. The ex­
perience used must be appropriate, that
is, not outdated, and may be “borrowed”
from a similarly situated creditor if a
creditor does not have sufficient appro­
priate experience. In addition, the system
may include a creditor’s individual judg­
ment of applicants as long as it is pri­
marily controlled by the empirically de­
rived aspect of the system, and the sys­
tem may include other information
beyond the application, such as a credit
report which is also scored.
The proposed definition prescribes the
Board’s standards for what constitutes a
“demonstrably and statistically sound”
system. First, if the entire applicant ex­
perience of the creditor is not used in
developing the system, the sample of ap­
plicants must be obtained in accordance
with generally accepted sampling princi­
ples and procedures, some of which are
enumerated. Second, the key questions
and related scores must be appropriately
linked to determining creditworthiness
under accepted standards of analysis.
Third, the system must be validated
either against a holdout sample of past




applicants if the remainder of the credi­
tor’s past applicants were used in de­
veloping the system or against a sample
of past applicants not used in developing
the system, and must be revalidated
against subsequent applicants of the
creditor at appropriate intervals. The
Board has not defined what constitutes
an appropriate interval. A creditor
should revalidate whenever any signif­
icant change occurs that leads that
creditor to believe th at its system is
significantly less predictive. Finally, a
creditor must adjust its system based
upon the validation or revalidation re­
sults. Note, however, that a creditor may,
as a m atter of business judgment, set the
acceptance score high or low depending
upon whether it desires to minimize bad
debt losses or increase credit volume.
Section 202.2 (p) —Definitions of “Ex­
tend Credit" and “ Extension of Credit.”

This definition is substantially the same
as § 202.3(m) of existing Regulation B
with a few editorial changes. For ex­
ample, the phrase “granted in the form
of a credit card” has been replaced by
“pursuant to an open end credit plan.”
Section 202.2(q)—Definition of "Good
Faith." This definition 1s new, being

derived from section 1-201(19) of the
Uniform Commercial Code. The amended
Act prohibits discriminating against
those who exercise rights under the Con­
sumer Credit Protection Act believing
th at their complaint is valid.
Section 202.2(r)—Definition of “Inad­
vertent Error” . This is a new definition.
It is drawn from § 202.11(a) of existing
Regulation B.
Section 202.2(s)—Definition of “Judg­
mental System of Evaluating Appli­
cants” . This is a new definition. The

purpose of the proposal is to create one
definition to include all systems for pre­
dicting creditworthiness other than
“demonstrably and statistically sound
empirically derived credit systems.” The
term is used in § 202.6(b) (1) (ii).
Section 202.2(t)—Definition of “Mari­
tal Status” . This definition is identical to

that contained in § 202.3 (n) of existing
Regulation B.
Section 202.2(u ) —Definition of Nega­
tive Factor or Value” . Section 701(b) (3)
of the amended Act forbirds assigning a
negative factor or value to an elderly ap­
plicant’s age in the operation of a
demonstrably and statistically sound
empirically derived credit system. Under
this definition, a creditor could not as­
sign a factor or value to the age of an
elderly applicant that is less favorable
than the value or factor assigned to the
class of applicants most favored by the
creditor on the basis of age. Thus, for
example, if a creditor’s system assigned
the highest weight to the 60-69 age class,
then a 70-year-old (or older) applicant
could not be assigned a lesser weight. A
greater weight could be assigned, how­
ever, if appropriate under the creditor’s
experience.

Section 202.2 (to)—Definition of “ Per­
son” . This definition is identical to th at

in § 202.3 (p) of existing Regulation B.

Section 202.2 (x )—Definition of “Perti­
nent Element of Creditworthiness". This

definition is new. Under section 701(b)
(2) of the amended Act, a creditor may
make inquiry concerning an applicant’s
age or whether the applicant’s income
derives from a public assistance program
if such inquiry is for the purpose of de­
termining a pertinent element of creditworthiness. The Board proposes to define
pertinent element of creditworthiness as
that information that has a manifest
relationship to creditworthiness.
Section 701(b) (2) of the amended Act
might be interpreted as prohibiting any
inquiry about age except in limited cir­
cumstances but there are serious prac­
tical problems associated with such an
approach. The Board is of the opinion
that the statutory language also may be
interpreted as permitting inquiries about
age in all cases, while restricting the
manner in which creditors may use the
information thus obtained. The Board
believes that the intent of the Congress
was to prohibit creditors from arbitrarily
cutting off credit on the basis of a per­
son’s fige.
Section 202.2 (y)—Definition of “Pro­
hibited Basis” . This definition is new. It

incorporates the characteristics th at a
creditor may not use in any aspect of a
credit transaction, except as otherwise
provided in the amended Act and reg­
ulation.
Section 202.2(z)—Definition of “Public
Assistance Program” . This is a new defi­

nition. The phrase is defined in order to
provide some examples of types of in­
come supplements which may not form a
basis for discrimination by a creditor
under section 701(a) (2) of the amended
Act.
Section 202.2(aa)—Definition
oj
“ State". This definition is identical tc
that in existing Regulation B.
Section 202.2 (bb)—Captions
ant
Catchlines. This section is new. Its p ur

pose is to indicate the nonsubs tan tivi
nature of the captions and catchline
used in the regulation, and it is derive<
from § 226.2(11) of Regulation Z.
S e c t i o n 202.3—C l a s s e s o f T r a n s a c t io n
E xem pted
P art

F rom

P r o v is io n s

of

T hi

This section has been reserved for th
inclusion at some future date of provi
sions exempting certain classes of trans
actions from one or more provisions c
the amended Act and regulation.
Section 703(a) of the amended Ac
provides that the Board may exemr
from one or more provisions of th
amended Act any class of credit trans
actions “not primarily for persona
family or household purposes.” In ord«
to exempt such transactions, howeve
the Board must make an express fine
Section 202.2 (v)—Definition of "Open ing that “the applictaion of such pr<
End Credit". This definition is identical vision or provisions would not contribu
to that in § 202.3 (o) of existing Regula­ substantially to carrying out the pu
tion B.
poses of this title.”

6

The Board invites comment regarding
which classes of transactions (if any)
should be exempted from one or more
provisions of the amended Act and Reg­
ulation B. If exemptions are to be
granted, a number of questions about
criteria arise: Should an exemption be
related to the amount of a borrower’s
assets? Or to the amount of the trans­
action (for example, one involving an
amount of $200,000 or more or $500,000
or more) ? Or to the creditor’s volume
of business (comparable to the exemp­
tion from the requirement of written
notification and reasons for adverse
action provided in section 701(d)(5) of
the amended Act for creditors who act
on 150 or fewer applications a year) ?
The Board invites interested members
of the public to address the question of
what other factors may be relevant in
distinguishing between those classes of
transactions that should remain subject
to the amended Act and those which may
be exempted in whole or in part. For ex­
ample, should non-consumer transac­
tions be treated differently regarding re­
tention of records, notification of action
taken, reasons for adverse action, and
other procedural requirements?
Section 202.10 of existing Regulation
B provides for specialized treatment for
business credit and for incidental, secu­
rities and utilities credit. The continua­
tion of the specialized treatment for such
credit is dependent upon the Board's
making an express finding that the ap­
plication of certain provisions of the
amended Act or Regulation B would not
contribute substantially to carrying out
the ilftrposes of the Act. Therefore, the
Board also invites the public to address
the question of how securities, incidental
and utilities credit should be addressed
in the amended Regulation B.
S e c t i o n 202.4—G e n e r a l R u l e C o n c e r n ­
in g

D is c r im in a t io n

Section 202.4 incorporates the general
prohibition against discrimination which
is contained in section 701(a) of the
amended Act. This general rule parallels
the rule in § 202.2 of existing Regulation
B, but reflects the amendments to the
Act. In addition to sex and marital status
discrimination, the general rule prohibits
discrimination on the basis of race, color,
religion, national origin, or age (pro­
vided that the applicant has contractual
capacity), because all or part of an ap­
plicant’s income derives from a public
assistance program, or because an appli­
cant in good faith has exercised any
right under the Consumer Credit Protec­
tion Act.
S e c t i o n 202.5—S p e c i f i c R u l e s C o n c e r n ­
in g

A p p l ic a t io n s

Section 202.5(.a)—Discouraging Appli­
cations. This section is substantially the

same as § 202.4(a) of existing Regulation
B. The words “on a prohibited basis” have
been substituted for the words "on the
basis of sex or marital status” to indicate
the broadened coverage of the amended
Act
Section 202.5(b)—General Rule Con­




cerning Requests for Information. Sec­
tion 202.5(b)(1) replaces 5 202.5(a) of
existing Regulation B. The proposal
makes clear that a creditor’s access to
information is not limited to determining
the probable continuity of income.
Section 202.5(b)(2) provides that a
creditor is not required to request any
particular information regarding an ap­
plicant. The proposal sets forth two ex­
ceptions to this general rule. A creditor
is required to request the race and sex
of an applicant under proposed § 202.13
(information collection for monitoring
purposes). A creditor may also be re­
quired to request certain information
from applicants to comply with an order
of, or enforcement agreement with, an
enforcement agency or court. Such agree­
ment or order could arise in connection
with the monitoring of compliance with
the amended Act or some other law, such
as the Fair Housing Act.
Section 202.Sic)—Information About a
Spouse or Former Spouse. This section

and § 202.5(d) are specific limitations to
the general rule stated in § 202.5(b) of
the proposed regulation. Section 202.5(c)
is substantially the same as § 202.5(b) of
existing Regulation B, except that the
words “and consider” have been deleted
because, in the scheme of the proposed
regulation, § 202.5 deals only with re­
quests for information, while § 202.6
treats consideration of information
received.
Section 202.5(d)—Information a Cred­
itor Cannot Request. Section 202.5(d) (1)

restates the provisions of § 202.4(c) (1)
and (2) of existing Regulation B.
The Board proposes to delete the
phrase “or as required to comply with
State law governing permissible finance
charges or loan ceilings.” The Board be­
lieves that this language is unnecessary
because the amended Act preempts any
such State laws insofar as they require
inquiries into marital status. If an appli­
cant who has received joint credit from
a particular creditor subsequently applies
for a separate loan from the same credi­
tor, the creditor may be required to ag­
gregate the accounts to determine per­
missible finance charges. However, such
aggregation must be done without regard
to marital status. In a State with loan
ceilings, the proposed regulation requires
that the ceilings be applicable to the
amount of credit which may be extended
to an individual, without regard to that
person’s marital status. Thus, to comply
with this type of State law, the creditor
needs to know only whether the applicant
is already obligated to that creditor. The
fact that a spouse is a co-obligor is not
relevant.
Proposed 5 202.5(d)(2) dealing with
alimony, child support and maintenance
payments replaces § 202.4(c) (3) and
5 202.5(d)(1) of existing Regulation B,
The rewording does not represent any
substantive change. It merely clarifies
the fact that an applicant has the option
of not disclosing the receipt of such
income if the applicant chooses not to
have the creditor utilize that income in
determining the applicant’s creditworth­
iness.

7

Proposed § 202.5(d) (3) deals with In­
quiries about an applicant’s sex. Section
202.4(c) (4) of existing regulation B pro­
hibits such inquiries implicitly; proposed
§ 202.5(d) (3) expressly prohibits them
except as required by § 202.13 (informa­
tion collectipn for monitoring purposes).
The proposal also incorporates language
from § 202.4(c) (4) of existing Regulation
B regarding courtesy titles and the use
of sex-neutral terms on application
forms.
Proposed § 202.5(d) (4) is substantially
the same as the first sentence of § 202.5
(h) of existing Regulation B regarding
questions relating to the bearing and
rearing of children. (The second sentence
of existing 5 202.5(h) would become
§ 202.6(b)(2> of this proposal). The
words “or rearing” have been added to
make the coverage of this section parallel
to § 202.6(b) (2) of this proposal in recog­
nition of the fact that inquiries regard­
ing the rearing of children may consti­
tute an indirect inquiry into plans or in­
tentions regarding childbearing. This
section does not preclude a creditor from
inquiring about an applicant’s de­
pendent-related financial obligations, so
long as the inquiries are made of all ap­
plicants and are not directed at a group
or groups of applicants on the basis of
sex, marital status or some other pro­
hibited basis.
Except to the extent required by
§ 202.13, proposed § 202.5(d) (5) prohibits
inquiries into the race, color, religion or
national origin not only of the applicant
but also of other persons indirectly in­
volved in the credit transaction.
Since applicants are protected against
discrimination on the basis of having
exercised in good faith any right under
the Consumer Credit Protection Act, pro­
posed § 202.5(d) (6) precludes a creditor
from routinely inquiring into the exercise
of such rights. However, where the
creditor learns of a disputed account
from a credit report, for example, this
section does not prevent the creditor
from requesting information relating to
the circumstances of the dispute from
the applicant or the creditor with whom
the dispute arose.
Section 202.5ie>—Application Forms.

Many creditors have experienced diffi­
culty in designing application forms that
comply with the requirements of existing
Regulation B, and creditors have in­
curred substantial expense in procuring
proper forms. The Board has included
two sample forms in the proposed regu­
lation to facilitate compliance by credi­
tors, one for open end, unsecured credit
and one for closed end, secured credit.
Additional sample forms may be included
in the final version of the revised regula­
tion. If these sample forms are adopted
in the regulation, creditors would not be
required to use them. If a creditor elected
not to use the sample forms and decided
to design its own forms, the creditor
would bear responsibility for insuring
that its forms were in compliance with
the information restrictions of the regu­
lation.

S e c t io n
202.6—S p e c i f i c R u l e s
C o n c e r n in g E v a l u a t io n o f A p p l i c a t io n s

Proposed § 202.6 deals with the use of
information in evaluating credit applica­
tions. Many of the provisions are drawn
from § 202.5 of existing Regulation B.
The purpose of this restructuring is to
group together material dealing with the
evaluation stage of the credit-granting
process. The proposal both incorporates
and elaborates upon the substantive pro­
visions contained in section 701 (a) and
(b) of the amended Act and represents
what the Board believes are appropriate
Interpretations of the statutory lan­
guage.
Section 202.6(a)—General Rule Con­
cerning Use of Information. The Board

proposes this section as a continuation
of the general rule concerning the use
of information stated in § 202.5(a) of ex­
isting Regulation B, with some changes
to reflect the amendments to the Act.
The basic provision of the section is that,
in evaluating an application, a creditor
may consider any information that it ob­
tains. This general rule is subject to two
qualifications. First, a creditor may not
use any information for the purpose of
discriminating against an applicant on a
prohibited basis, except as provided in
§ 202.8 regarding special purpose credit
programs. Second, a creditor’s used of in­
formation is also curtailed by certain
specific prohibitions contained in §§ 202.5 and 202.6 of the proposed regulation.
As proposed, this section would subsume
the first sentence of § 202.5(k) of exist­
ing Regulation B. The Board also pro­
poses to delete the phrase “concerning
the probable continuity of an applicant’s
ability to repay’’ found in § 202.5(a) of
existing Regulation B as unnecessary in
the proposal.
The amended Act proscribes inten­
tional discrimination and also may be
interpreted as prohibiting actions that
have the effect of discriminating against
applicants on any prohibited basis.
Language similar to that contained in
section 701(a) of the amended Act is
found in Title VII of the Civil Rights Act
of 1964 relating to prohibitions of dis­
crimination in employment, and has been
interpreted as prohibiting the use of re­
quirements for employment or promotion
that are discriminatory in effect even
though neutral in purpose, unless such
requirements are demonstrated to have
a manifest relationship to the job in
question.
As explained in footnote 6 to proposed
$ 202.6(a), the legislative history of the
amended Act shows that Congress in­
tended certain judicial decisions enun­
ciating this “effects test” from the
employment area to be applied in the
credit area. The Board interprets the ap­
plication of an “effects test” to the
credit area to mean that the use of cer­
tain information in determining creditworthiness, even though such informa­
tion is not specifically proscribed by pro­
posed § 202.6(b), may violate the
amended Act if the use of that informa­
tion has the effect of denying credit to a
class of persons protected by the




amended Act at a substantially higher
rate than persons not of that class, unless
the creditor is able to establish that the
information has a manifest relationship
to creditworthiness. Even then, if an ag­
grieved applicant could show th at a
creditor could have used a less dis­
criminatory method which would serve
the creditor’s need to evaluate creditworthiness as well as the challenged
method, a violation may be found to
exist.
The Board proposes to delete § 202.5
(b), (c) and (d) of existing Regulation
B as unnecessary, since the Board be­
lieves that those provisions are subsumed
into the general rule of proposed § 202.6
(a ).

poses In (11) to allow an applicant to
present Information to explain a lack of
or a bad credit history because a credit
history or its absence may not accurately
reflect on applicant’s creditworthiness?
S ection 202.7—S pec ific R ules C o n ­
cerning

E xtensions of C redit

This section contains provisions drawn
from 99 202.4, 202.5 and 202.7 of existing
Regulation B. The final provision, 9 202 7(e), is new.
Section 202.7(a)—Separate Accounts.

This section Is substantially the same as
9 202.4(b) of existing Regulation B. The
Board proposes to add a footnote to make
clear th at a creditor may not refuse to
grant a separate account on any basis
Section 202.6(b)—Specific Rules Con­ prohibited by the amended Act, the sec­
cerning Use of Information. Proposed tion being Intended to highlight a com­
§ 202.6(b) in part embodies the limita­ mon past discriminatory practice.
Section 202.7(b)—Designation
of
tions on the use of information found in
§ 202.5 of existing Regulation B. Proposed Name. Proposed 9 202.7(b)(1) is identi­
§ 202.6(b) (1) is a broadened and refined cal to 9 202.4(e) of existing Regulation
version of existing § 202.5(f). It pro­ B. The Board proposes to add a new sec­
hibits a creditor from taking any pro­ tion indicating th at a creditor may ask
hibited basis, not just sex or marital whether the applicant has applied for
status, into account in evaluating credit- or received credit in another name. The
worthiness. In accordance with section purpose of this new language is to allow
701(b) (2) and (3) of the amended Act, creditors to gain access to an applicant’s
however, it expressly allows considera­ full credit history.
tion of age and receipt of income from a
Section 202.7(c)—Action Concerning
public assistance program. Footnote 8 Open End Accounts. This section is de­
contains several examples in this respect rived from 9 202.5(i) of existing Regula­
to illustrate the scope of this exception tion B. The Board proposes to add lan­
to the proposed rule. Footnote 7 points guage to this section to protect persons
out that the section does not preclude reaching a certain age or retiring. If
consideration of age when utilized to adopted, this provision would prohibit
favor an elderly applicant, or considera­ creditors from requiring a reapplication,
tion of m arital status or source of in­ changing the terms of an account or ter­
come for the purpose of ascertaining a minating an account because a person
creditor’s rights and remedies in accord­ has reached a certain age or has retired.
ance with § 701(b) ( 1) and <4) of the This prohibition would protect only those
amended Act.
persons who are contractually liable on
Proposed § 202.6(b) (2) incorporates an account and who have not demon­
the prohibition in 9 202.5(h) of existing strated an unwillingness or inability to
Regulation B regarding a creditor’s con­ repay. A creditor could require a reap­
sidering assumptions or aggregate statis­ plication when credit was granted to an
tics on childbearing and related matters. applicant based upon the income of the
Proposed 9 202.6(b) (3) incorporates, applicant’s spouse.
The Board also proposes to add a foot­
with a few changes, § 202.5(g) of exist­
ing Regulation B. The Board proposes to note explaining that a creditor may con­
delete the phrase “in a credit scoring duct a “reevaluation” a t any time. Dur­
system or other method of evaluating ing a reevaluation, the creditor may re­
applications” as unnecessary. Another quest information concerning the con­
proposed change would permit creditors tinued creditworthiness of the applicant
to consider the existence of a telephone but may not terminate the account un­
at the business of applicants for non­ less information in the applicant’s file
or obtained in the reevaluation demon­
consumer credit.
Proposed 9 202.6(b)(4) continues and strates an inability or unwillingness to
broadens the prohibitions contained in repay.
S e c t i o n 202.7(d)—Signatures of
S 202.5(e) of existing Regulation B and
Spouse or Other Person. The language
incorporates existing § 202.5(d) (2).
Proposed 9 202.6(b)(5) incorporates contained in 5 202.7(d)(1) is substan­
9 202.5<j ) of existing Regulation B with tially similar to 5 202.7(a) of existing
little substantive change. It also incor­ Regulation B, except that all prohibited
porates 9 202.11(a) of existing Regula­ bases are covered and the bar againsi
tion B concerning mechanical, electronic requiring the signature of nonapplicant
or clearical errors as applicable to this persons has been extended to covei
section. The Board proposes to add the guarantors. For example, a marriec
phrase “when available” in (i) to reflect guarantor could not be required to sup­
the fact that such credit history may not ply the signature of a spouse where n<
always be available, and to substitute the similar requirement is imposed on un
word “creditworthiness” in (ii) and (iii) married guarantors.
Proposed 9 202.7(d) (2) (1) is substan
for “willingness or ability to repay” be­
cause creditworthiness more completely tlally the same as 99 202.7(b) (1) an<
expresses what a credit history is in­ (11) of existing Regulation B. Likewise
tended to reflect. Finally, the Board pro­ proposed 9 202.7(d) (2) (11) is substan

8

tially the same as 5 202.7(c) of existing
Regulation B. Section 202.7(d) (3) Is new.
As proposed, it permits a creditor to ob­
tain the signature of a nonapplicant
spouse or other person on an instrument
which would facilitate access to an asset
used to establish creditworthiness but
which is not pledged. A signature could
not be required on an instrument im­
posing personal liability unless the ap­
plicable State law required it in order to
evidence valid consideration. If adopted,
this provision would permit a creditor
to obtain the signature of a nonappli­
cant spouse on a note without violating
the general prohibition against requir­
ing a nonapplicant spouse to assume per­
sonal liability for a financial obligation
incurred by the applicant spouse.-The
Board proposes to adopt this provision
because in some States both spouses must
sign the note evidencing the debt if the
creditor is to have access to an un­
pledged asset in the event of default.
Section 202.7(e) —Conditions to Exten­
sions of Credit. This provision is new. It

illustrates the operation of the general
rule against discrimination on a prohib­
ited basis and is intended to highlight
certain discriminatory practices.
S e c t i o n 202.8—S p e c ia l P u r p o s e C r e d i t
P rogram s

Section 202.8(a)—General Rule and
Standards for Programs. Section 202.8 in­

corporates the provisions of section 701
(c) of the amended Act, which allows a
creditor offering certain special credit as­
sistance programs to refuse to extend
credit on a prohibited basis without vio­
lating the amended Act. In such circum­
stances, a creditor need not provide a
notice of action taken, a statement of
reasons for denial, or the ECOA notice
if an applicant does not qualify under
the special requirements of the particu­
lar program.
The first exemption relates to “any
credit assistance program expressly au­
thorized by law for an economically dis­
advantaged class of persons” (Section
701(c) (1) of the amended Act and § 202.8(a)(1) of the proposed regulation). In
this situation, the class of persons to be
benefited will be defined by the appli­
cable law.
The second category encompasses cre­
dit assistance programs offered by non­
profit organizations for the benefit of
their members, or for the benefit of
economically disadvantaged persons (§
701(c) (2) of the amended Act and § 202.8(a)(2) of the proposed regulation).
This category was designed to permit the
establishment and operation of three
types of credit-granting programs that
might otherwise be found to be imper­
missibly discriminatory. First, this sec­
tion allows credit unions to refuse to ex­
tend credit to non-members. Second,
and more broadly, the membership ex­
ception permits any nonprofit organiza­
tion (such as a cooperative association or
a religious body) to limit extensions of
credit to its members. Third, if an econ­
omically disadvantaged group is served,
then this category authorizes nonprofit
organizations to establish “affirmative




action” programs similar to those avail­
able under government auspices.
The third category (section 701(c)(3)
of the amended Act and § 202.8(a) (3)
of the proposed regulation) covers “any
special purpose credit program offered
by a profit-making organization to meet
special social needs.” The legislative his­
tory of the amended Act indicates that
the Congress did not want to preclude
profit-making creditors from establish­
ing special programs that would prefer
applicants in‘certain categories, provided
that such programs were designed and
operated to increase the availability of
credit for persons who previously had lit­
tle or no access to the credit market.
Such efforts might include, for example,
the provision of credit to young persons
without previous credit experience or the
extension of credit to public assistance
recipients or elderly applicants whose in­
come might not otherwise qualify them
for credit.
Proposed
§ 202.8(a) (3)
provides
standards to insure that a program uti­
lizes discriminatory characteristics only
for the purpose of benefiting specified
classes of persons and not as a vehicle to
circumvent the requirements of the
amended Act and proposed regulation.
Thus, the section requires that the pro­
grams be established and administered
pursuant to a written plan that identifies
the beneficiaries of the program and that
sets forth the basic procedures and
standards for extending credit pursuant
to the program. In addition, the program
must extend credit to persons who other­
wise might not be able to obtain such
credit or might not obtain it on as favor­
able terms. This latter qualification Is
met if the program organization deter­
mines from its own experience or other­
wise that the beneficiaries of the pro­
gram generally (but not necessarily con­
clusively) would not meet its customary
standards of creditworthiness.
Section 202.8(b)—Special Rule Con­
cerning Requests and use of Information.

Proposed § 202.8(b) would permit a cred­
itor to ask for and consider information,
which the creditor otherwise would not
be permitted to obtain, relating to the
probihited bases of discrimination in
order to determine eligibility for a spe­
cial purpose credit program.
The Board solicits comment on a
broader issue related to this section and
to proposed § 202.13, namely, whether
revised Regulation B should forbid cred­
itors from requesting certain information
from applicants. If creditors are re­
quired to obtain certain information (for
example, the applicant’s sex) for mon­
itoring purposes in real estate credit,
should they be barred from requesting
that information in other transactions?
As explained above, proposed § 202.8(b)
allows a creditor to request otherwise
prohibited information to determine elig­
ibility for a special purpose credit pro­
gram. However, unless a profit-making
organization is permitted to obtain in­
formation relating to the prohibited
bases about all its applicants and not
only for eligibility purposes, it may not
be able to determine the need for an af­

9

firmative action program for a protected
group or to ascertain the best design for
an affirmative action program. For ex­
ample, evidence presented to the Board
suggests that if creditors were permitted
to ask about the sex of applicants, cer­
tain creditors could construct separate
scoring systems for women and men
which would increase substantially credit
availability for women without reducing
credit availability for men.

Section 202.8(c)—Special Rule in Case
of Financial Need. If eligibility for a spe­

cial purpose program is based on need,
proposed § 202.2(b) would allow a cred­
itor to request and consider the appli­
cant’s marital status and information
about the spouse’s financial resources
which otherwise could not be asked under
the regulation.
S e c t i o n 202.9—N o t i f i c a t i o n s
This section encompasses all of the
requirements for the notices that cred­
itors must provide to applicants. These
requirements appear in §§ 202.4(d), 202.5(m) and 202.6(b) of existing Regula­
tion B. The notice contained in § 202.6(b)
(1) of existing Regulation B does not ap­
pear in proposed § 202.9 because that no­
tice must be mailed by February 1, 1977,
which is prior to the effective date of the
proposed amendments to the regulation.
In addition, the requirements of §§ 202.4
(d) and 202.5(m) of existing Regulation
B have been combined in proposed § 202.9
with other changes required by the
amended Act.
Section 202.9(a)—Notification of Ac­
tion Taken, ECOA Notice, and Statement
of Reasons. This section sets forth the

requirements for the content and timing
of notices and explains to whom and by
whom notices are to be given. Proposed
§ 202.9(a) (1) requires that the notice of
action taken be given within a reasonable
time not exceeding 30 days after a cred­
itor receives a completed application or
within a similar period after taking ad­
verse action. The 30-day deadline is spec­
ified in section 701(d)(1) of the
amended Act. The amended Act author­
izes the Board to specify some period
longer than 30 days. However, since a
completed application has been defined
(§ 202.2(f)) to include only an applica­
tion concerning which a creditor has ob­
tained all necessary information, the
Board has not proposed a longer period
for notification for any class of transac­
tions.
Proposed § 202.9(a) (1) (i) allows the
notice of action taken upon approval to
be given by implication, as by the sending
of a credit card. The Board believes th at
this approach is practical and reason­
able.
Proposed § 202.9(a) (2) specifies the
content of the notification when adverse
action is taken. The notification must
contain the statement of action taken re­
quired by existing § 202.5(m) (1), the
ECOA notice required by existing § 202.4(d) and the statement of specific rea­
sons for adverse action (or disclosure of
the right to such statement) similar to
the statement required by present § 202.5(m'> (2>. The Board proposes to require

these notices to be given together because
the Board believes th at public under­
standing of the notices would be thereby
enhanced. An important point to note
about the proposal is th at it requires the
ECOA notice to be given only when ad­
verse action is taken. A creditor, of
course, may continue to provide the
ECOA notice at the application stage, as
long as the notice is also given when ad­
verse action is taken.
Proposed § 202.9(a) (3) provides that,
if more than one applicant is involved
in a credit transaction, the notification
need be given to only one applicant. Sim­
ilarly, proposed § 202.9(a) (4) provides
that, if more than one creditor is in­
volved in a credit transaction, the re­
quired notification need be given by only
the creditor th at extends credit accep­
table to the applicant. If no credit is
granted, or if credit is offered which is
not acceptable to the applicant, then
each creditor must give the required
notification. For example, if an auto
dealer “shops” an application to several
banks and one bank extends credit, the
proposal requires only that bank to pro­
vide the notice of action taken. However,
if none of the banks grants credit or if
the credit offered is not acceptable to the
applicant, then all the banks must give
the required notices. In addition, if the
dealer is a creditor in the transaction
under the definition of that term as used
in this regulation (§ 202.2(1)), the dealer
would also be obligated to give the no­
tices in the total rejection situation.
Creditors may arrange, however, for all
required notices to be provided through
one party if each creditor is identified.
This procedure is sanctioned by section
701(d) (4) of the amended Act. The last
sentence of § 202.9(a) (4) would insulate
a creditor from liability for acts or omis­
sions of a third party in those cases
where the third party supplies the no­
tice, provided th at the creditor follows
reasonable procedures to insure compli­
ance. The Board has proposed this ar­
rangement to avoid a situation in which
an applicant would receive the desired
credit from one source, while also receiv­
ing several notices of adverse action from
other sources with which the applicant
had not dealt.
Section 202.9(b)—Form of ECOA No-

ticular type of creditor. The latter change
would facilitate the giving of notices by
third parties on behalf of several differ­
ent types of creditors.
Proposed § 202.9(b) (2) provides a sug­
gested form for the statement of specific
reasons for adverse action. Use of the
form, properly completed, would consti­
tute compliance with the requirement of
the section. However, if a creditor does
not use this form, it must design its own
form in accordance with the require­
ments of § 701(d) (3) of the amended
Act.
The text of the proposed statement
of specific reasons is identical to that in
existing § 202.5(m) (3), except for a
change in the title reflecting the fact that
the statement is required in all instances
of adverse action and not just in cases of
denial or termination of credit. The foot­
note is not an addition to the form itself;
rather, it limits the permissible use of the
category “unemployed” as a reason for
adverse action.
Proposed 5 202.9(b)(3) provides that
the notices required by this section may
be combined with other information or
disclosures, including disclosures under
the Truth in Lending Act, the Fair Credit
Reporting Act, and other portions of the
Consumer Credit Protection Act.

Section 202.9(c)—Oral Notifications.
As authorized by section 701(d)(5) of

the amended Act, proposed § 202.9(c)
allows the notices required by proposed
§ 202.9 to be given orally by any creditor
which received 150 or fewer credit appli­
cations in the preceding calendar year.
The legislative history indicates that the
Congress intended to relieve small credi­
tors of the burden of preparing formal
written notices.
Section 202.9(d)— Withdrawn Appli­
cations. This section permits creditors to

treat applications as withdrawn in cer­
tain circumstances. For example, after
all steps have been taken to complete an
application, an applicant may decide not
to go through with the transaction. In
that situation, a creditor would be per­
mitted to consider the application as
withdrawn and would not need to pro­
vide the required notices.

Section 202.9(e)—Failure of Compli­
ance. This section corresponds to existing

§ 202.11(a) as it applies to notice re­
quirements. The term “inadvertent
tice and Statement of Specific Reasons. error” is defined in proposed § 202.2(r).
This section is drawn from existing S e c t i o n 202.10—F u r n i s h i n g o f C r e d it
202.4(d) and 202.5(m) (2) and (3).
I n f o r m a t io n
Proposed § 202.9(b) (1) includes a sample
Except for the minor exceptions dis­
ECOA notice, but unlike existing § 202.4
<d), which requires creditors to use the cussed below, the provisions of proposed
sample verbatim, the proposal provides § 202.10 parallel those contained in
th at substantial adherence to the sample § 202.6 of existing Regulation B. The final
form constitutes compliance. In addition, version of proposed § 202.10 will reflect
the section permits inclusion in the no­ the Board’s decision on its proposed
tice of a reference to a similar State amendments to existing 8 202.6, which
statute or regulation and State enforce­ were published in the F e d e r a l R e g is t e r
on June 4, 1976 (41 FR 22592).
ment agency.
Since the requirements of existing
The text of the proposed notice is
identical to th at contained in existing 5 202.6(b) (1) must be complied with by
8 202.4(d), except th at the additional February 1, 1977, which is prior to the
bases of prohibited discrimination have effective date of the proposed regulation,
been added and, in the last sentence, only the provisions of that section are not in­
the word “creditor” is used, rather than a cluded in the proposed regulation. Sec­
blank requiring a description of the par­ tion 202.6(b) (2) of existing Regulation B




10

has ben redesignated 5 202.10<b), and
existing 5 202.6(b) (3) has been incor­
porated into 5 202.10(b). Proposed
§ 202.10(c) incorporates the substance of
existing § 202.11(a).
S e c t i o n 202.11—R e l a t io n t o S t a t e L a w
Proposed § 202.11 implements 5? 705
<c), (d), (f) and (g) of the Act.
Section 202.11(a)—Separate Exten­
sions of Consumer Credit. Proposed

§ 202.11(a) is substantially the same as
§ 202.8(a) of existing Regulation B, ex­
cept for the addition of the phrase “im­
poses liability upon a nonapplicant
spouse.” That language has been added
to underscore the Board’s interpretation
that section 705(c) of the amended Act
preempts State necessaries laws and fam­
ily support statutes when such laws im­
pede the separate extension of consumer
credit to individually creditworthy ap­
plicants.
Section 202.11(b)—Finance Charges
and Loam Ceilings. Proposed § 202.11(b)

is identical to § 202.8(b) of existing Reg­
ulation B.

Section 202.11(c)—Inconsistent State
Laws. Proposed § 202.11(c) deals with

two categories of State laws which may
be inconsistent in whole or in part with
the amended Act or the regulation. The
first category includes State laws not
dealing with credit discrimination and
State laws dealing with credit discrimi­
nation but not includng any of the pro­
hibited bases covered by the amended
Act. An example is a State law prohibit­
ing credit discrimination against handi­
capped persons. Under proposed 8 202.11
(c)(1), such a State law is preempted
only to the extent that a creditor is not
able to comply with it without violating
the federal law. This is the approach
taken in § 202.11(b) of the existing reg­
ulation.
The other category of State law are
those dealing with credit discrimination
on any prohibited basis covered by the
amended Act. An example is a State law
prohibiting discrimination on the basis
of sex or marital status. Under proposed
5 202.11(c)(2), which incorporates the
provisions of section 705(f) of the
amended Act, such laws are not pre­
empted except to the extent of any in­
consistency with the Act. The Board is
authorized under section 705(f) of the
amended Act to determine whether such
inconsistencies exist, except th at the
Board may not determine th at an in­
consistency is present if the State lav,
gives greater protection to the applicant
The varied nature of such State laws
tends to negate the helpfulness of gen­
eral regulatory guidelines on the subject
of what constitutes inconsistency. Thi
Board, therefore, is reluctant to mak<
general determinations as to inconsist
ency without the advice of the Stale of
ficials familiar with the laws. Accord
ingly, proposed 5 202.11(c) (2) (i) reflect
the Board’s exercise of its authority U
determine inconsistency by providing
that all State laws regarding credit dis
crimination on any prohibited basi
which are similar in nature. purpo««

scope, intent, effect, or requisites to the
provisions of sections 701 or 702, or both,
of the amended Act and the implement­
ing provisions in the regulation are
deemed to be inconsistent with federal
law until any such law is demonstrated
not to be inconsistent. Proposed § 202.11
(c) (2) (ii) outlines the procedure by
which State officials may seek Board
review. Supplement I, which will be pre­
pared before March 23,1977, the effective
date of the amended Act, will set forth
the criteria by which the Board would
make the necessary determination.
Section 202.11(d)—Exemption for
State Regulated Transactions. Section

705(g) of the amended Act grants to the
Board authority to exempt from the re­
quirements of sections 701 and 702 of the
amended Act and their implementing
provisions in the regulation any class of
credit transactions within any State if
the Board determines that, under the law
of th at State, th at class of transactions
is subject to requirements substantially
similar to those imposed by the federal
law or that State law provides protection
to the applicant, and that there is ade­
quate provisions for enforcement. Pro­
posed § 202.11(d) of the regulation im­
plements this provision of the statute. In
order to maintain concurrent federal and
State court jurisdiction and continue
federal enforcement agency involvement,
this section provides, in accordance with
section 705(g) of the amended Act, that
any violation of an exempted State law
is also a violation of the amended Act
and the regulation. The procedure and
criteria for applying for an exemption
will be detailed in Supplement I. This
approach parallels that taken in Regula­
tion Z (12CFR 226.12).
S e c t i o n 202.12—R e c o r d R e t e n t i o n
Section 202.12(a)—Retention of Pro­
hibited Information. Proposed § 202.12

(a) is based upon § 202.5(k) of existing
Regulation B. It protects creditors that
receive and retain information which
they are forbidden to request under
§ 202.5 if such information was obtained
from certain listed sources.
Section 202.12(b)—Preservation of
Records. Proposed § 202.12(b) parallels

§ 202.9(a) of the existing regulation.
Since the Amendments to the Act extend
the statute of limitation for 1 year to 2
years, the Board proposes to extend the
period for which creditors must retain
records from 15 to 25 months. This will
include the limitations period plus an ap­
propriate period to effect service of proc­
ess. In addition, the Board proposes to
expand the scope of record retention to
Include information th at the creditor
may be required to obtain by agencies
monitoring compliance with the amended
Act or the regulation. The final clause in
proposed § 202.12(b) (1) (i), “and not re­
turned to an applicant at the applicant’s
request,” indicates th at a creditor may
return material to the applicant and
leed not copy the material before doing
so.
Proposed § 202.12(b) (2) is drawn from
‘xisting 8 202.9(b)(1). Proposed § 202.-




12(b)(3) incorporates existing § 202.9
(c). Proposed 5 202.9(b)(4) is new. It
relates to recordkeeping in transac­
tions involving multiple creditors and
should be read in conjunction with
proposed § 202.9(a) (4). In a multiple
creditor transaction, the proposal
would require those creditors that do
not have to provide the notifications
specified in proposed § 202.9(a) never­
theless to retain for 25 months any writ­
ten or recorded information about the
applicant that the creditor has in its
possession. Such creditors, however,
would, not have to obtain any material
that they did not otherwise have in their
possession.
Proposed § 202.12(b) (5) provides that,
in a transaction involving non-consumer
credit, a creditor must retain informa­
tion relating to an application for three
months unless during that time the
creditor receives a written request from
the applicant to retain the information
beyond that period. If such a request is
received, the creditor would be required
to retain the information for 25 months.
This proposal incorporates in part the
different treatment accorded business
credit in 5 202.10(c) of existing Regula­
tion B.
S e c t i o n 202.13— I n f o r m a t i o n f o r
M o n it o r in g P u r p o s e s

Section 202.13 is new. It appears in
the proposal for the sole purpose of focus­
ing comment on what data should be
obtained and how it should be obtained
if the Board ultimately decides that data
regarding the prohibited bases of dis­
crimination should be gathered.
Testimony at the Board’s April 27
hearing, recent Congressional hearings
and comments from public groups have
raised the question of whether real estate
creditors should be required to note the
characteristics of applicants to facilitate
enforcement of the Equal Credit Oppor­
tunity Act.
Various government agencies share
authority and responsibility for enforcing
the ECOA. While the Board possesses
authority for enforcing the ECOA only as
to state-chartered member banks, the
regulations adopted by the Board under
the ECOA apply to all creditors and all
forms of credit. Thus, there is a potential
for a uniform notation requirement, if
adopted by the Board in Regulation B.
In view of the overlapping jurisdiction
of other agencies, public comment is in­
vited on whether the Board should pre­
scribe a notation requirement in Regula­
tion B.
Assuming the Board decides that a
notation requirement should be adopted
under Regulation B, the Board invites
comment on the following additional
issues:
(1) Should such a requirement be lim­
ited to credit extended for the purchase
of residential real estate and secured
thereby ?
(2) Should such a requirement be lim­
ited to notation of race and/or sex or
should data regarding other prohibited
bases of discrimination such as religion

11

also be noted?
(3) What classifications should be
used to describe applicants as to race?
One approach would be to use the cate­
gories “White” and “Non-white.” A sec­
ond approach would be to leave a blank
space after the question of race to enable
applicants to supply the answer which
corresponds to their own perception.
(Sample: Race ___________ ) Another
approach would be to use a classification
scheme developed in the employment
field (American Indian or Alaskan Na­
tive, Asian or Pacific Islander, Black,
Hispanic and White).
(4) Should the required inquiries be
incorporated within creditors’ applica­
tion forms or should a separate special
form be used?
(5) How should creditors make the in­
quiries? Should applicants be required to
answer the questions? If applicants de­
cline to answer the questions, should the
creditor then be required to fill in the
information based upon observation?
Should a personal interview be required
as part of the application? Are there
other mechanisms that could be used to
insure a response rate adequate to make
the data meaningful?
(6) Should economic data be obtained
along with any demographic data? If
economic data about the applicant and
any property to be financed is deemed
relevant, what specific data should be
obtained? What is the principal economic
data ordinarily obtained and relied upon
by creditors? For example, should credi­
tors be required to obtain such informa­
tion as income, number of dependents,
etc.?
It is proposed to amend 12 CFR Part
202 to read as follows:
Sec.
202.1

PART 202— EQUAL CREDIT
OPPORTUNITY

Authority, scope, enforcement, pen­
alties and liabilities.
Definitions and rules of construction.
General rule prohibiting discrimina­
tion.
202.5 Specific rules concerning applica­
tions.
202.6 Specific rules concerning evaluation
of applications.
202.7 Specific rules concerning extensions
of credit.
202.8 Special purpose credit programs.
202.9 Notifications.
202.10 Furnishing of credit information.
202.11 Relation to State law.
202.12 Record retention.
202.13 Information for monitoring purposes.
Appendix A—Federal Enforcement Agencies.
Appendix B.
Supplement I (to be prepared).
A u t h o r it y : Sec. 703 of the Equal Credit
Opportunity Act, U.S.C., Title 15, sec. 1691
202.2
202.4

et seq.

§ 202.1 Authority, scope, enforcement,
penalties and liabilities.

(a)
Authority and scope. This P a rt1
comprises the regulations issued by the
Board of Governors of the Federal Re-*
*As used herein, the words “this Part”
mean Regulation B.

serve System pursuant to Title VH tion must contain a complete statement,
(Equal Credit Opportunity Act) of the signed by the person making the request
Consumer Credit Protection Act, as or a duly authorized agent, of all relevant
amended (15 U.S.C. 1601 et seq.). Except facts of the transaction or credit ar­
as otherwise provided herein, this P art rangement relating to the request. True
applies to all persons who are creditors, copies of all pertinent documents must be
as defined in § 202.2(1).
submitted with the request. The rele­
(b) Administrative enforcement. (1) vance of such documents must, however,
As set forth more fully in section 704 of be set forth in the request and the docu­
the Act, administrative enforcement of ments must not merely be incorporated
the Act and this Part with respect to by reference. The request must contain
certain creditors is assigned to the an analysis of the bearing of the facts
Comptroller of the Currency, Board of on the issues and specifying the pertinent
Governors of the Federal Reserve Sys­ provisions of the statute and regulation.
tem, Board of Directors of the Federal Within 15 business days of receipt of
Deposit Insurance Corporation, Federal the request, a substantive response will
Home Loan Bank Board (acting directly be sent to the person making the re­
or through the Federal Savings and Loan quest or an acknowledgement will be sent
Insurance -Corporation), Administrator which sets a reasonable time within
of the National Credit Union Adminis­ which a substantive response will be
tration, Interstate Commerce Commis­ given.
sion, Civil Aeronautics Board, Secretary
(ii)
Any request for reconsideration
of Agriculture, Farm Credit Administra­ an official staff interpretation of tills Part
tion, Securities and Exchange Commis­ must be addressed to the Secretary,
sion and Small Business Administra­ Board of Governors of the Federal Re­
tion.
serve System, Washington, D.C. 20551,
(2)
Except to the extent that admin­within 30 days of the publication of such
istrative enforcement is specifically com­ interpretation in the F ederal R egister.
mitted to other authorities, compliance Each request for reconsideration must
with the requirements imposed under the contain a statement setting forth in full
Act and this P art will be enforced by the the reasons why the person making the
Federal Trade Commission.
request believes reconsideration would be
(c) Penalties and liabilities. (1) Sec­ appropriate, and must specify and dis­
tion 706 of the Act provides th at any cuss the applicability of the relevant
creditor to comply with any requirement facts, statute and regulations. Within 15
imposed under the Act or, pursuant to business days of receipt of such request
section 702(g), this Part, is subject to for reconsideration, a response granting
civil liability for damages in individual or or denying the request will be sent to the
class actions, and states th at an ag­ person making the request, or an ac­
grieved applicant may seek, in addition, knowledgement will be sent which sets
equitable and declaratory relief. Pur­ a reasonable time within which such
suant to section 704 of the Act, violations response will be given.
of the Act or, pursuant to section 702(g),
(5) Pursuant to section 706(e) of the
this Part, constitute violations of other Act, the Board has designated the Direc­
federal laws which may provide further tor and other officials of the Office of
penalties.
Saver and Consumer Affairs as officials
(2) Section 706 further provides that, “duty authorized” to issue, at their dis­
if the agencies responsible for adminis­ cretion, official stay interpretations of
trative enforcement are unable to obtain this Part. This designation shall not be
compliance with the Act or, pursuant to interpreted to include authority to ap­
section 702(g), this Part, they may refer prove particular creditors’ forms in any
the m atter to the Attorney General. On manner.
such referral, or whenever the Attorney
(6) The type- of interpretation issued
General has reason to believe th at one will be determined by the Board and the
or more creditors are engaged in a pat­ designated officials by the following
tern or practice in violation of the Act criteria:
or this Part, the Attorney General may
<i) Official Board interpretations will
bring a civil action for appropriate relief. be issued upon those requests which in­
(3) Section 706(e) relieves a creditor volve potentially controversial issues of
from civil liability resulting from any act general applicability dealing with sub­
done or omitted in good faith in con­ stantial ambiguities in this P art and
formity with any rule, regulation or in­ which raise significant policy questions.
terpretation by the Board of Governors
(ii) Official staff interpretations will
of the Federal Reserve System, or with be issued upon those requests which, In
any interpretation or approval issued by the opinion of the designated officials,
a duly authorized official or employee of require clarification of technical am­
the Federal Reserve System, notwith­ biguities in this P art or which have no
standing that after such act or omission significant policy implications.
has occurred, such rule, regulation or in­
(iii) Unofficial staff interpretations
terpretation Is amended, rescinded or will be issued where the protection of
otherwise determined to be invalid for section 706(e) of the Act is neither re­
any reason.
quested nor required, or where time
(4) (i) Any request for formal Board strictures require a rapid response.1**•
interpretation or official staff interpreta­
tion of this Part must be addressed to the
(c) (3) through (6) reflect
Director of the Office of Saver and Con­ the*• Subsection
action of the Board taken on June 28,
sumer Affairs, Board of Governors of the 1976, amending section 202.13 of Regulation
Federal Reserve System, Washington, B effective July 30, 1976, which Is reported
D.C. 20551. Each request for interpreta­ in 41 FR 28252.




12

§ 202.2 Definitions and rules of con­
struction.

For the purposes of this Part, unless
the context indicates otherwise, the fol­
lowing definitions *and rules of construc­
tion apply:
(a) “ Account” means an extension of
credit. The word “use” , when employed
in relation to an account, refers only to
open end credit.
(b) “ Act” means the Equal Credit Op­
portunity Act (Title V n of the Consumer
Credit Protection Act).
(c) “Adverse action” (1) For the pur­
pose of notification of action taken,
statement of reasons for denial, and rec­
ord retention, the term means:
(1) A refusal to grant credit in an
amount and on terms acceptable to an
applicant; or
(ii) A termination of an account or an
ofunfavorable change in the terms of an
account which does not affect all or a
substantial portion of a class of the
creditor’s accounts; or
(iii) A refusal to increase the amount
of credit available to an applicant when
an applicant requests an increase in a
way that informs the creditor that the
applicant is intentionally seeking an
increase.
(2) The term does not include:
(i) A change agreed to by the appli­
cant; or
(ii) Any action taken as a result of
inactivity, default or delinquency; or
(iii) A refusal to extend credit when
the extension would exceed a previously
established credit limit and the creditor
has not been informed that the appli­
cant is intentionally seeking an increase.
(d) “ Age” refers only to natural per­
sons and, in relation to such persons,
means the number of fully-elapsed years
from the date of the applicant’s birth.
(e) “Applicant” means any person
who requests or who has received an
extension of credit from a creditor and
includes any person who is or may be
contractually liable with respect to an
extension of credit.
(f) “Application” means an oral oi
written request for an extension ol
credit which is made in accordance with
procedures established by a creditor foi
the type of credit requested; the tern
does not include the use of an account tc
obtain an amount of credit which does
not exceed a previously established credit
limit. A “ completed application fo\
credit” means one in connection witl
which a creditor has received all of th<
information the creditor regularly ob
tains and employs in evaluating appli­
cations for the amount and type of credi
requested, including credit reports, an:
additional information requested fron
the applicant, and any necessary ap
provals by governmental agencies, pro
vided the creditor has exercised sud
diligence as the circumstances require.
(g) “Board” refers to the Board o
Governors of the Federal Reserv
System.
•Note that some of the definitions in th
Part are not Identical with those in 12 CF
226 (Regulation Z).

(h) “ Consumer credit” means credit application of and in accordance with ed, as deAned by applicable State law.
extended to a natural person in which generally accepted sampling principles For
the purposes of this Part, the term
the money, property or service which is and procedures, including, as appro­ “unmarried” includes a person who is
the subject of the transaction is pri­ priate, pure or stratiAed random selec­ divorced or widowed.
marily for personal, family or household tion from the applicant Ale, inclusion of
(u) “Negative factor or value” in re­
purposes.
rejected as well as accepted applicants in lation to the age of an elderly applicant
(i) “ Contractually liable" means ex­ the sampling frame, and weighting of means
a factor, value or weight
pressly obligated to repay all debts aris­ sample subgroups of applicants in rela­ that isutilizing
less favorable regarding elderly
ing on an account by reason of an agree­ tion to the total universe of applicants applicants
than it is regarding the class
ment to that effect.
during the period chosen as the basis for of applicants most favored by a creditor
(j) “Credit” means the right granted system development; and
on the basis of age.
by a creditor to an applicant to defer
(ii) In which the predictive variables
(v) “ Open end credit” means credit
payment of a debt, incur debt and defer Anally included in the system are devel­
its payment, or purchase property or oped from the statistical sample or cen­ extended pursuant to a plan under which
services and defer payment therefor.
sus of applicants, and the points to be the creditor may permit the applicant to
(k) “Credit card” means any card, given (or comparable basis for assigning make purchases or obtain loans, from
plate, coupon book or other single credit weights) to such predictive variables are time to time, directly from the creditor
device existing for the purpose of being determined to have a statistically sig- or indirectly by use of a credit card,
used from time to time upon presentation niAcant relation to credit risk under ac­ check, or other device, as the plan may
provide. The term does not include nego­
to obtain money, property or services on cepted standards of analysis; and
credit.
(iii) Which is developed for the pur­ tiated advances under an open end real
(l) “Creditor” means a person who in pose of predicting the creditworthiness of estate mortgage or a letter of credit.
(w) “Person” means a natural person,
the ordinary course of business regularly applicants in relation to legitimate busi­
participates in the decision of whether or ness interests of the creditor utilizing the corporation, government or governmen­
not to extend credit. The term includes system, as in minimizing bad debt losses tal subdivision or agency, trust, estate,
an assignee, transferee or subrogee of an and operating expenses in accordance partnership, cooperative or association.
original creditor, but an assignee, trans­ with the creditor’s business judgment;
(x) “Pertinent element of creditwor­
feree or subrogee is not a creditor with and
thiness" in relation to a system of evalu­
regard to any violation of the Act or this
(iv) Which is validated as to its pre­ ating applicants means any information
Part committed by the original creditor dictive ability by statistical tests applied about applicants that a creditor obtains
unless the assignee, transferee or subro­ to an independent sample drawn from and considers and which has a manifest
gee knew or had reasonable notice of the the applicant Ale in developing the sys­ relationship to a determination of creditviolation. The term does not ipclude a tem, or, in the case of a system developed worthiness.
person whose only participation in a utilizing a complete census, to a sampled
(y) “Prohibited basis” means race,
credit transaction is to honor a credit subset of the complete census which was color,
religion, national origin, sex, mari­
card.
held out and not used in the hypothesis tal status, or age (provided the appli­
(m) “Credit transaction" means every testing and statistical estimation re­ cant
the capacity to contract as de­
aspect of an applicant’s dealings with a quired in the empirical development of Aned has
by applicable State law ); or the
creditor in connection with a prospective the system, and with respect to subse­ fact that
all or part of the applicant's
or existing extension of credit, including, quent applicants of the creditor is re­ income derives
from any public assist­
but not limited to, solicitation of prospec­ validated at appropriate periods, and is ance program; or
fact that the ap­
tive applicants by advertising or other adjusted as appropriate, if necessary, as plicant has in goodthefaith
exercised any
means; information requirements; in­ a result of such revalidation tests.
right
under
the
Consumer
Credit
Protec­
vestigatory procedures; standards of
(p) “Extend credit” and “extension of tion Act.a
creditworthiness; terms of credit; fur­ credit” mean the granting of credit in
(z)
“Public assistance program” means
nishing of credit information; revoca­ any form and include, but are not lim­
tion, alteration or termination of credit; ited to, credit granted in addition to any any Federal, State or local governmental
assistance program that provides a direct
and collection procedures.
existing credit or credit limit; credit
(n) “ Discriminate against an appli­ granted pursuant to an open credit plan; continuing periodic income supplement,
cant” means to treat an applicant less the reAnancing or other renewal of any whether premised on entitlement or
neeed. The term includes, but is not
favorably than other applicants.
credit, including the issuance of a new
(o) “ Empirically derived credit sys- credit card in place of an expiring credit limited to, Aid to Families with De­
em.” (1) The term means a credit sys- card or in substitution for an existing pendent Children, food stamps, Medicare
em that predicts creditworthiness pri- credit card; the consolidation of two or and Medicaid, rent and mortgage supple­
narily by an allocation of points (or more obligations; and the deferral of ex­ ment or assistance programs, Social
omparable basis for assigning weights) isting credit, the continuing in force of a
o information obtained about applicants previously issued credit card, or the con­
“Note the distinction between the first
n relation to the predictive variables tinuance of existing credit without any clause
of the definition, which is not limited
hat are Anally included in the system special effort to collect at or after matu­ to applicants
with those characteristics, and
he total number of points for an ap­ rity.
the last two clauses, which are so limited
plicant (or comparable basis for assignThis
distinction
means, for example, that it
(q) “Good faith” means honesty in
ig weights)
is impermissible to consider in the decision
fact
in
the
conduct
or
transactions
con­
concerning the extension of credit not only
(1) Depending upon how the appli- cerned.
the applicant's race or the race of partners
ant, with respect to such predictive
(r)
“ Inadvertent error” means a me­ or officers of the applicant, but also the race
ariables, compares with a probability chanical, electronic or clerical error that
individuals with whom the applicant deals
imple or a complete census of previous a creditor shows by a preponderance of of
in business or socially, the race o^ i n d i v i d pplicants of a creditor who applied for the evidence was not intentional and oc­ uals
who are or may be associated with the
"edit within the immediately preceding curred notwithstanding the maintenance applicant
in connection with the purpose of
ppropriate period of time; and
the extension of credit (for example, the
of
procedures
reasonably
adapted
to
<ii) Determining, alone or in conjunc- avoid any such error.
tenants in an apartment complex to be con­
structed with the loan proceeds), or the race
on with additional information about
(s)
“Judgmental
system
of
evaluating
ie applicant, whether an applicant is applicants” means any system for pre­ of individuals residing in the neighborhood
in which the property that will be collateral
;emed creditworthy.
dicting the creditworthiness of an appli­ for the extension of credit is located. A
(2) A “demonstrably and statistically cant
other
than
a
demonstrably
and
sta­
creditor
may take into account in making a
und” empirically derived credit system
tistically sound empirically derived credit credit decision, however, any applicable law,
a system:
system.
regulation or executive order restricting deal­
(i) In which, if a complete census Is
(t) “Marital status” means the state ings with citizens or governments of other
»t used, the sample is obtained by the of being unmarried, married or separat­ countries or imposing limitations with re­
spect to credit extended for their use.




13

<3) A creditor may request the name
and address in which an account is car­
ried if the applicant discloses the exist­
ence of th a t account in applying for
credit.
(d) Information a creditor cannot re­
quest. (1)A creditor shall not request, if
an applicant applies for an unsecured
separate account, the m arital status of
the applicant, except in a community
property State.45*Whenever a creditor is
permitted to request an applicant’s
§ 202.4 General rule prohibiting dis­ marital status under this Part, only the
crimination.
terms “married,” “unmarried" and
A creditor shall not discriminate "separated” shall be used.
against an applicant on a prohibited
(2) A creditor shall not inquire
basis with respect to any aspect of a whether any income stated in an appli­
credit transaction.
cation is derived from alimony, child
§ 202.5 Specific rules concerning appli­ support or maintenance payments, un­
less the creditor first discloses to the ap­
cations.
plicant that such income need not be re­
(a) Discouraging applications. A cred­ vealed if the applicant does not choose
itor shall not make any oral or written for the creditor to utilize such income in
statement, in advertising or otherwise, to determining the creditworthiness of the
applicants or prospective applicants applicant.
which would discourage on a prohibited
(3) Except as provided in 8 202.13, a
basis a reasonable person from making creditor shall not request the sex of an
or pursuing an application.
applicant. An applicant may be requested
(b) General rule concerning requests to designate a title on an application
for information. (1) Except as otherwise form (such as Mr., Mrs., Ms. or Miss) If
provided in this section, a creditor may the form discloses that the designation
request any information in connection of such title is optional; an application
with an application.1
form shall otherwise use only terms that
(2)
A creditor need not request anyare neutral as to sex.
particular item or type of information
(4) A creditor shall not request in­
concerning an applicant, except as pro­ formation about birth control practices,
vided in § 202.13 (information for moni­ intentions concerning the bearing or
toring purposes) or unless ordered to do rearing of children, or capability to bear
so by, or required pursuant to an en­ children.
forcement agreement with, an enforce­
(5) Except as provided in § 203.13, a
ment agency acting within its statutory creditor shall not request the race, color,
authority or by a court, in order to religion or national origin of an appli­
monitor compliance with the Act, this cant or other persons directly or in­
Part, or other law, in which case a cred­ directly identified with the applicant or
itor does not violate this section by re­ the credit transaction.
questing such information.
(6) A creditor shall not request in­
(c) Information about a spouse or formation concerning the exercise by the
former spouse. (1) Except as permitted applicant of any right under the Con­
in this subsection, a creditor may not sumer Credit Protection Act.
request any information concerning the
(e) Applicant forms. A creditor may
spouse or former spouse of an applicant. design its own application forms in con­
(2)
A creditor may request any In­formity with the requirements of this
formation concerning an applicant’s section.
Alternatively, if a creditor
spouse (or former spouse under para­ wishes, it may utilize the application
graph (c) (2) (iv) of this section which forms contained in Appendix B.' A cred­
may be requested about the applicant if: itor who utilizes a form that conforms to
(i) The spouse will be permitted to use one contained in Appendix B is in com­
the account; or
pliance with all the requirements of para­
(ii) The spouse will be contractually
liable upon the account; or
5 This provision does not preclude request­
(iii) The applicant is relying on com­
relevant information which may in ­
munity property or the spouse’s income ing
directly disclose marital status, such as ask­
as a basis for repayment of the credit ing about liability to pay alimony, child
requested; or
support or maintenance; the source of in­
(iv) The applicant is relying on ali­ come to be used as a basis for the repayment
mony, child support or maintenance pay­ of the credit requested, which may disclose
ments from a spouse or former spouse that it is a spouse’s income; whether any
obligation disclosed by the applicant has a
as a basis for repayment of the credit co-obligor,
which may disclose that co­
requested.
obligor is a spouse or former spouse; or the

Security and Supplemental Security In­
come, and unemployment compensation.
(aa) “ State" means any State, the
District of Columbia, the Commonwealth
of Puerto Rico or any territory or posses­
sion of the United States.
(bb) Captions and catchlines are in­
tended solely as aids to convenient refer­
ence. and no inference as to the intent of
any provision of this Part may be drawn
from them.

4 This paragraph Is not Intended to abro­
gate any federal or State law regarding
privacy or privilege of Information credit
reporting limitations, or similar restrictions
on obtainable Information. Nor should per­
mission to request information be confused
with how It may be utilized. How Informa­
tion a creditor obtains may be used in con­
nection with a determination of creditworth­
iness Is governed by section 202.6.




ownership of assets, which may disclose the
interest of a spouse, when such assets are
relied upon in extending the credit. Such in ­
quiries are allowed by the general rule of
subsection (b).
• Appendix B presently contains two
forms—one for open end, unsecured credit
and one for closed end, secured credit. Addi­
tional sample forms, including a real estate
credit form, will be Included in the final
version of the Appendix.

14

graphs (c) and (d), of the section pro­
vided th at the creditor does not other­
wise request information prohibited by
paragraphs (c) or (d) and complies
with any further infromation require­
ments of paragraph (b) of this section.
8 2 0 2 .6 Specific ru les co ncerning evalua­
tio n o f ap p licatio n s.

(a) General rule concerning use of in­
formation. Except as otherwise provided

in the Act and this Part and as long as
the information is not used for the pur­
pose of discriminating against an ap­
plicant on a prohibited basis, in evaluat­
ing an application a creditor may utilize
any information the creditor obtains.7*•
(b) Specific rules concerning use of
information. (1) A creditor shall not take
a prohibited basis into account in any
system of evaluating the creditworthi7 Information concerning race, color, re­
ligion, national origin, sex or marital status,
and the good faith exercise of any right
under the Consumer Credit Protection Act
may not be considered in determining creditworthiness except in accordance with sec­
tion 202.8. Information concerning age and
Income derived from a public assistance pro­
gram may be considered in determining
creditworthiness. Within these guidelines,
this subsection permits a creditor to use any
Information obtained (such as information
permitted to be requested or which is other­
wise obtained, including, but not limited
to, the recognition of State property laws
directly or Indirectly affecting creditworthi­
ness) in accordance with the requirements
of the Act and this Part. In this regard, sub­
section (b) specifically proscribes in several
Instances (for example, discounting of in ­
come and telephone listing) the use of in­
sufficiently refined general information whicl
is accordingly not causally related to a de
termination of creditworthiness where thi
effect of using such information would b<
to discriminate against an applicant on i
prohibited basis, even though the credito
may have no Intent to discriminate. Th<
legislative history of the Act indicates tha
Congress Intended this concept, as enunci
ated in the cases of Griggs v. Duke Power Co
401 U.S. 424 and Albemarle Paper Co. ^
Moody, 422 U.S. 405, to be applicable 1
connection with a creditor’s evaluation of ap
plications. See Senate Report to accompan
H.R. 6516, No. 94-689, pp. 4-5; House Repoi
to accompany H.R. 6516, No. 94-210, p. .
However, it should be recognized that tfc
use of other Information not speciflcal!
proscribed by subsection (b) in determinlr
the creditworthiness of applicants may dec
credit to a class of persons protected by tl
Act and this Part at a substantially high'
rate than persons not of that class. In a
cordance with the Board’s understanding ■
the Griggs decision, such use may be a viol:
tion of this subsection unless the credit
establishes that the Information has a mar
fest relationship to creditworthiness. In a
cordance with the Albemarle decision, as t:
Board understands it, an applicant mlg
then be able to show that other lnformati<
which a creditor could use, with a lest
discriminatory effect, would serve the ere
ltor’s purpose equally well in predicting ere
ltworthlness. Such a showing, unrebutted
the creditor, would be evidence the credli
was employing the Information used men
as a “pretext” for discrimination, e.g., wi
the intent of discriminating against app
cants on a prohibited basis.

ness of applicants,' except a creditor cant because of a prohibited basis, but
(1) Require a reapplication; ” or
may:
a creditor may consider the amount and
Require a change in the terms of
(1) Take age into account as a pre­ probable continuance of income levels of the(ii)
account; or
dictive variable actually used in a de­ any Income In evaluating the credit(iii) Terminate the account.
monstrably and statistically sound em­ worthiness of an applicant.
(2) A creditor may require a reappli­
pirically derived credit system if in the
(5) To the extent the creditor con­
on the basis of a change in mari­
operation of th at system the age of an siders credit history in evaluating appli­ cation
tal status where open end credit has been
elderly applicant is not assigned a nega­ cants of similar qualifications for a granted
to an applicant based on income
tive factor or value: and
similar type and amount of credit, a which is earned solely by the applicant’s
(ii)
Take age or whether all or anycreditor shall not fail to consider in spouse.
part of an applicant’s income derives evaluating credit-worthiness, unless such
(d)
Signatures of spouse or other per­
from any public assistance program into failure results from an inadvertent sons.
(l) Except as provided in para­
account in determining a pertinent ele­ e rro r:•
graph (d)(2) of this section, a creditor
ment of creditworthiness for use in a
(i) When available, the credit history
not require the signature of another
judgmental system of evaluating appli­ of accounts designated under the re­ shall
person, other than a co-applicant, on a
cants.*
quirements of section 202.10 as accounts credit instrument (including, without
(2) A creditor shall not use, in evaluat­ which the applicant and a spouse are limitation, a guaranty agreement) unless
ing the creditworthiness of an applicant permitted to use or for which both are such
a requirement is imposed without
assumptions or aggregate statistics relat­ contractually liable;
regard to a prohibited basis on all simi­
ing to the likelihood of any group of per­
(ii) On the applicant’s request, any
qualified applicants who apply for a
sons bearing or rearing children, or for information the applicant may present larly
similar
type and amount of credit.
th at reason receiving diminished or in­ tending to indicate that the available
(2) A creditor may require the signa­
terrupted income in the future.
credit history does not accurately reflect ture of:
(3) A creditor shall not take into ac­ the applicant’s creditworthiness;10 and
(i) A non-applicant spouse where a
count the existence of a telephone listing
(iii) On the applicant’s request, the married applicant applies for unsecured
in the name of the applicant. A creditor credit history, when available, of any credit
in a community property State, if
may take into account the existence of a account reported in the name of the ap­ the applicable
State law denies the ap­
telephone in the residence of an appli­ plicant’s spouse or former spouse which plicant
power to manage or control suf­
cant for consumer credit, or at the busi­ an applicant can demonstrate reflects ficient community
property to qualify for
ness of an applicant for other than con­ accurately the applicant’s creditworthi­ the amount of credit
requested under the
sumer credit.
ness.
creditor’s standards of creditworthiness
(4) A creditor shall not exclude from
.7 Specific rules concern in g exten- and the applicant does not have suffi­
consideration a portion of the income of § 2 0 2tions
cient separate property to qualify for the
o f credit.
an applicant or the spouse of the appli-•
amount of credit requested without re­
(a) Separate accounts. A creditor shall gard
to any community property; or
• This provision does not prevent a creditor not refuse to grant a separate account
(ii)
A non-applicant spouse or other
from using the age of an elderly applicant to a creditworthy applicant on the basis person where an applicant applies for
when age is used to favor that applicant or of sex or marital status.11
credit, on such instruments as
(b> Designation of name. (1)A credi­ secured
from considering the marital status o f ’an
are necessary or are reasonably believed
applicant or a source of the applicant’s in­ tor shall not prohibit an applicant from
come for the purpose of ascertaining the opening or maintaining an account in a by the creditor to be necessary, under the
creditor’s rights and remedies applicable to birth-given first name and surname or facts and the applicable statutory or
the particular extension of credit and not to a birth-given first name and a combined decisional law of the State to create a
valid lien, pass clear title, waive or re­
Ilscriminate in a determination of credit- surname.
worthiness.
lease inchoate rights or present interests
(2)
Paragraph
(b)(1)
if
this
section
•In relation to income derived from a
m property or assign earnings.
jublic assistance program, a creditor may does not preclude a creditor’s asking or
(3)
Where an»applicant applies for un­
:onsIder, for example, the length of time an taking other action to determine whether secured credit and the creditor in ex­
ipplicant has been receiving unemployment credit has been applied for or received
•ompensation; whether the applicant intends by an applicant in a name other than tending the credit relies on assets in
o continue to reside in the Jurisdiction in that in which the applicant is presently which a non-applicant spouse or other
person has or may obtain an interest,
elation to residency requirements for bene- applying.
its; and the status of any dependents to
the creditor may require the signature of
(c)
Action
concerning
open
end
ac­
scertain whether benefits the applicant Is
counts. (1) In the absence of evidence such non-applicant for the purpose of
•resently receiving will continue.
In relation to age, a creditor may consider of inability or unwillingness to repay a obtaining access to the asset in the event
:>r example, the occupation and length of creditor shall not take any of the follow­ of default, as long as the signature does
Ime to retirement of an applicant to Judge ing actions with respect to a person who not impose personal liability except as
whether the applicant’s income (including is contractually liable on an existing open
stirement income, as applicable) will con- end account on the basis of that person’s may be required under applicable State
kiuo at a sufficient level to support the reaching a certain age or retiring, or on law to meet requirements as to consid­
^tension of credit until its maturity and
eration.
le adequacy of any security offered by the the basis of a change of name or marital
(e) Conditions to extensions of credit.
ppllcant to determine credit risk if the status:
A creditor shall not Impose on an appli­
uration of the extension of credit will exjed the life expectancy of the applicant. In
“ For example, a lack of recent credit bis­ cant because of a prohibited basis con­
Us latter regard, an elderly applicant might tory may be explicable because the applicant
ot qualify for a 5 percent down condomin- is young or has chosen not to use credit for ditions to the approval of an extension
im loan because the duration of the loan some time prior to retirement. An unfavor­ of credit which are not customarily im­
cceeds the applicant’s life expectancy and able credit history may be explicable because posed by the creditor on other applicants.
te cost of realizing on the collateral exeds the amount of the downpayment The
me applicant may be creditworthy with a
rger downpayment and a shorter loan marity. A creditor may also consider an apIcant s age, for example, to assess the
eanlng of the applicant’s length of employent or residence (a young applicant may
ive Just entered the Job market, an elderly
•plicant may recently have retired and
jved from a long-time residence).




the creditor extending the past credit
customarily resorted to legal action or be­
cause the subject of the extension of credit
was shoddy or defective merchandise.
u A refusal to grant a separate account to
a creditworthy applicant on any prohibited
basis would be a violation of the Act and
this Part. This provision is Intended to high­
light certain common past Instances of dis­
crimination now prohibited by the Act and
this Part.

15

“ The term reapplication where used in
this provision does not include a “reevalua­
tion’’ of creditworthiness, which may then
lead to the need for a reapplication if the
information developed Indicates a lack of
continuing creditworthiness. Additional in­
formation may be requested in connection
with a "reevaluation.” However, the require­
ments of section 202.5 must be observed in
relation to any “reevaluation.”

r

mon characteristics that all applicants the applicant accepts credit offered, only
are required to possess. In such circum­ the creditor extending the credit need
stances, the solicitation and considera­ comply with this section. If a transaction
ia> General rule and standards for tion of th at information shall not con­ involves more than one creditor and no
programs. The Act and this Part are not stitute a violation of the Act or this Part. credit acceptable to the applicant is of­
violated and adverse action is not taken
(c)
Special rule in the case of financialfered, then each creditor must comply
if, pursuant to any of the following types need. If one of the criteria for the ex­ with this section. The required notifica­
of special purpose credit programs, a tension of credit under any of the three tions may be made directly by the credi­
creditor refuses to extend credit to an types of special purpose credit programs to r^ ) or indirectly through a third
applicant solely because the applicant described in paragraph (a) of this sec­ party, provided in either case th at the
does not qualify for credit under the spe­ tion is financial need, then, notwith­ identity of each creditor is disclosed.
cial requirements of the particular pro­ standing the prohibitions of 202.5 and Whenever the notification is made
gram:
202.6, the creditor may request of an ap­ through a third party, a creditor is not
(1) Any credit assistance program ex­ plicant and may consider in determining liable for any disclosure, act or omission
pressly authorized by Federal or State eligibility for such program information of the third party which constitutes a
law for the benefit of an economically regarding an applicant’s marital status violation of this section if the creditor
disadvantaged class of persons: or
and spouse’s financial resources. In such accurately and timely provided the third
(2) Any credit assistance program ad­ circumstances, the solicitation and con­ party with the information necessary for
ministered by a non-profit organization, sideration of that information shall not the notification and was maintaining
as defined under section 501(c) of the constitute a violation of the Act or this procedures reasonably adapted to avoid
Internal Revenue Code of 1954, as Part.
any such violation.
amended, for the benefit of its members
(b)
Form of ECOA notice and state­
or for the benefit of an economically dis­ § 202.9 Notifications.
ment of specific reasons. (1) ECOA no­
advantaged class of persons: or
(a)
Notification of action taken. ECOAtice. A statement of the provisions of sec­
(3) Any special purpose credit program notice, and statement of reasons.
tion 701(a) of the Act and the name and
offered by a profit-making organization
(1) Notification of action taken. A address of the federal agency in substan­
to meet special social needs, provided creditor shall notify an applicant within tially the following form satisfies the
that:
a reasonable time not to exceed 30 days: requirement of subsection (a)(2):
(i) The program is established and ad­
(1) After receiving a completed appli­
The Federal Equal Credit Opportunity Act
ministered pursuant to a written plan cation, of the creditor’s action approv­ prohibits
creditors from discriminating
th at (A) identifies the class or classes of ing the application or taking adverse ac­ against credit
applicants on the basis of race
persons th at the program is designed to tion with respect to the applictaion (no­ color, religion, national origin, sex or marital
benefit and (B) sets forth the procedures tification of approval may be express or status, or age (provided the applicant has
and standards for extending credit pur­ by implication, where, for example, the the capacity to contract in accordance with
suant to the program;
applicant receives a credit card, money, applicable State law); because all or part o:
(ii) The program is established and property or services in accordance with the applicant’s income derives from any pub
lie assistance program; or because the appli
administered to extend credit to a class the application); and
cant has in good faith exercised any righ
of persons who, pursuant to the custo­
(ii) After taking adverse action with under the Consumer Credit Protection Act
mary standards of creditworthiness used respect to an existing account, of the The federal agency that administers com
by the program organization, either creditor’s adverse action.
pliance with this law concerning this credito
probably would not receive such credit
(2) Content of Notification. Any noti­ is (name and address as specified by the ap
or probably would receive it on less fa­ fication given to an applicant against propriate agency listed in Appendix A).
vorable terms than are ordinarily avail- whom adverse action is taken shall be in
ale to other applicants applying to the writing and shall contain a statement of The sample statement printed above ma
modified immediately following th
organization for a similar type and the action taken and the provisions of be
required references to the federal act an*
amount of credit; and
section 701(a) of the Act, the name and
(iii) The program is administered so address of the federal agency which ad­ enforcement agency, to include refer
as not to discriminate against an appli­ ministers compliance concerning the ences to any similar State statute, rul
cant on the basis of race, color, religion, creditor giving the notification, and or regulation and to a State enforcemei:
agency.
national origin, sex, marital status, age either:
(2) Statement of specific reasons.
(provided th at the applicant has the ca­
(i) A statement of specific reasons for statement of reasons for adverse actio
pacity to contract), income (if any) de­ the action taken; or
shall be sufficient if it is specific and ir
rived from a public assistance program,
(ii) As the creditor may elect, either a
or good faith exercise of any right under disclosure of the right of the applicant dicates the primary reason(s) for th
the Consumer Credit Protection Act, ex­ to receive a written statement of specific adverse action. A creditor may formulai
cept th at all program participants may reasons, or of the right to receive an oral its own statement of reasons in checkli
letter form, or may use the samp
be required to share one or more of those statement of specific reasons, within 30 or
characteristics if the program was not days after the receipt by the creditor of form printed below, which, if proper
constitutes compliance wii
established and is not administered with an oral or written request for a state­ completed,
the purpose of evading the requirements ment of reasons made by an applicant the requirements of subsection (a) <2; (i
Statements that an applicant does n
of the Act or this Part.
within 60 days after the notification of
(b)
Special rule concerning requests adverse action. The creditor shall also meet membership requirements or th
and use of information. If all partici­ specify the name, address and telephone the adverse action was based on tJ
pants in any of the three types of special number of the person or office from creditor’s internal standards or policit
purpose credit programs described in which the statement of reasons can be without further specification, or that t
paragraph (a) of this section are re­ obtained. If a creditor elects to disclose applicant failed to achieve the qualifyi:
quired to possess one or more common only the right to receive an oral state­ score on the creditor’s credit scori
characteristics relating to race, color, re­ ment of specific reasons, it shall further
system are insufficient.
ligion, national origin, sex, marital sta­ disclose the right of the applicant to
STATEM ENT OF PRIMARY REASON «S > FOB
tus, age, or receipt of income from a pub­ have the statement of specific reasons
ADVERSE ACTION
lic assistance program and if the special confirmed in writing within a reasonable 1 ____ Credit Application:
time not exceeding 30 days after a writ­
purpose credit program otherwise satis­ ten
___ not completed
request for such confirmation is re­
___lack of credit references
fies the requirements of paragraph (a ), ceived by the creditor.
___ credit reference too new
then, notwithstanding the prohibitions
(3) Multiple applicants. If there is
check.
of §§ 202.5 and 202.6, the creditor may more than one applicant, the notification 2 ........ Information furnished by: X
Credit Bureau, 10 Main 8tr
request of an applicant and may consider need only be given to any one of them.
Anytown, Anystate 00000, Ph
(4) Multiple creditors. If a transac­
in determining eligibility for such pro­
No: 000 000-0000.
gram information regarding those com­ tion involves more than one creditor and
§ 202.8 Special
grams.




purpose

credit

pro­

16

3 . ......... Employment:
___unemployed1
___temporary or Irregular
---- unable to verify
___length of employment.
4............Income:
___insufficient
___unable to confirm
___information refused.
6. ____ Residence:
___too short a period
___temporary.
8 . ------- We do not customarilygrant credit
to any applicant on the terms
and conditions you requested.
7. . . . . . . Other (Specify)______________

(2) When furnishing information to
consumer reporting agencies or others
concerning an account designated under
this section or designated prior to the
effective date of this Part, a creditor shall
report the designation and furnish any
information concerning the account:
(i) To consumer reporting agencies, in
a manner which will enable the agencies
to provide access to information about
the account in the name of each spouse ;
and
(ii) To recipients other than such
agencies, in the name of each spouse
about whom such information is re­
1This reason does not refer to unemploy­ quested.
ment due to retirement, and does not suffice
(b) Requests to change manner in
as a reason for adverse action in the case of which information is reported. Within
an applicant who has income from a public 90 days of receipt of a request to change
assistance program.
the manner in which information is re­
(3)
Other information. The notifica­ported to consumer reporting agencies
tion required by subsection (a) (1) may and others, a creditor, when furnishing
include other information so long as it information concerning any such ac­
does not detract from the required con­ count, shall designate the account to
tent of the notification. This notification reflect the fact of participation of both
also may be combined with any disclo­ spouses. The creditor shall report the des­
sures required under other titles of the ignation and furnish any information
Consumer Credit Protection Act, pro­ concerning the account to any recipient
vided all requirements such as clarity, other than a consumer reporting agency
conspicuousness and placement are satis­ in the name of each spouse about whom
fied, and may appear on either or both such information is requested and, when
sides of the paper if there is a clear reporting to consumer reporting agen­
reference on the front to any information cies, in a manner which will enable such
>n the back.
agencies to provide access to information
(c) Oral notifications. The applicable about the account in the name of each
•equirements of this section may be satis- spouse. A spouse’s signature on a request
led by oral notifications (including state- to change the manner in which Informa­
nents of specific reasons) in the case of tion concerning an account is furnished
my creditor that did not receive more shall not change the legal liability of
han 150 applications during the calen- either spouse upon the account.
lar year immediately preceding the
(c) Inadvertent errors. A failure to
alendar year in which the notification comply with this section is not a viola­
f adverse action to a particular appli- tion if caused by an inadvertent error if
ant is to be given.
soon as possible after the discovery
(d) Withdrawn applications. If an ap- as
of the error the creditor corrects the
lication is approved by a creditor and
and commences compliance with
tie applicant, within a reasonable time erors
requirements of this section, as then
ot exceeding 30 days, does not con- the
iimmate the transaction, a creditor may applicable.
'eat the application as withdrawn for § 202.11 Relation to State law.
ie purpose of the notification required
(a) Separate extensions of consumer
7 subsection (a) (1).
credit. If application is made for a sepa­
(e) Failure of compliance. A failure to rate extension of consumer credit, any
imply with this section is not a violation provision of State law which either pro­
caused by an inadvertent error.
scribes the separate extension of con­
202.10 Furnishing o f credit informn. sumer credit to each spouse or imposes
liability upon a nonapplicant spouse is
tion.1*
if the applicant establishes in­
(a) Accounts established on or after preempted
ovember 1, 1976. (1) For every account dependent creditworthiness.
(b) Finance charges and loan ceilings.
tablished on or after November 1, 1976
If each spouse separately and volun­
creditor shall:
(i) Determine whether the account is tarily applies for and obtains a separate
te which an applicant’s spouse will be account with the same creditor, the ac­
rmitted to use or upon which both counts shall not be aggregated or other­
ouses will be contractually liable, if wise combined for purposes of determin­
ch accounts are offered by the creditor- ing permissible finance charges14 or
permissible loan cealings under the laws
d
(ii> Designate any such account to of any State or of the United States.
lect the fact of participation of both Permissible loan ceiling laws shall be
construed to permit each spouse to be
juses.
•This section does not change § 202.6 of
14For example, w h e n the h i g h e s t f in a n c e
sent Regulation B, except to reflect the charge rate may be imposed on c r e d i t ex­
>ctlve date of the amendments to the Act, tensions up to $300 and a married couple
l will ultimately Include any action taken is Jointly liable for unpaid debt in the
the June 4, 1976 proposal to amend § 202.6 amount of $250, a creditor may charge the
Regulation B, which Is reported in 41 highest rate on $50 of credit extended on
22592.
an individual basis to husband or wife.




17

separately and individually liable up to
the amount of the loan ceilings, less the
amount for which both spouses are
jointly liable.15
(c) Inconsistent State laws. (1) Ex­
cept as provided in paragraphs (a) and
(b) of this section, the Act and this Part
preempt only those State laws, other than
State laws with respect to credit dis‘crimination on any prohibited basis,
which are inconsistent with the Act or
this Part, and then only to the extent
of the inconsistency. Such a State law
is not inconsistent with the Act or this
P art if the creditor can comply with the
State law without violating the Act
or this Part.
(2)(i) The Act and this Part do not
preempt any State laws with respect to
credit discrimination on any prohibited
basis, except to the extent that those
laws are inconsistent with any provision
of the Act or this Part, and then only to
the extent of the inconsistency. For this
purpose, a State law with respect to
credit discrimination on any prohibited
basis, which is similar in nature, purpose,
scope, intent, effect or requisites to the
provisions of sections 701 or 702, or both,
of the Act and their implementing pro­
visions in this Part, is declared incon­
sistent with the Act and this Part within
the meaning of section 705(f) of the Act,
unless and until a contrary determina­
tion is made by the Board pursuant to
the procedures provided in this sub­
section.
(ii) A State, through its Governor. At­
torney General, or other appropriate of­
ficial having primary enforcement or in­
terpretive responsibility for its credit dis­
crimination law, may apply to the Board
in accordance with Supplement I to this
Part for a determination that the State
law with respect to credit discrimination
on any prohibited basis offers greater
protection to applicants than a compa­
rable provision of the Act and its imple­
menting provision(s) in this Part or is
otherwise not inconsistent with the Act
and this Part, or for a determination
with respect to any Issues not clearly
dealt with or covered by this subsection
as to the consistency or lack of con­
sistency of a State law' w'ith respect to
credit discrimination on any prohibited
basis with the Act or its implementing
provisions in this Part.
(d) Exemption for State regulated
transactions. (1) In accordance with the
provisions of Supplement I to this Part,
any State may make application to the
Board for exemption of any class of
credit transactions within the State from
the requirements of sections 701 and 702
of the Act and the corresponding pro­
visions of this Part. The Board will grant
such an exemption only if:
(i) The Board determines that under
the law of that State, that class of credit
transactions is subject to requirements
substantially similar to those imposed

UlF o r e x a m p le , I n a S t a t e w ith a p e r m i s ­
s ib le lo a n c e llin g o f $1000, If a m a r r i e d cou­
ple w e re J o in tly lia b le f o r u n p a i d d e b t In the
a m o u n t o f $250, e a c h s p o u s e c o u ld s u b s e ­
q u e n t l y b e c o m e in d i v i d u a l l y lia b le for $750.




turned to an applicant at the applicant’s
request;
(ii) A copy of the following documents
if furnished to the applicant in written
form (or, if furnished orally, any nota­
tion or memorandum with respect
thereto made by the creditor):
(A) The notification of action taken;
(B) The statement of specific reasons
for adverse action given to an applicant
in accordance with section 202.9; and
(iii) Any written statement submitted
by the applicant alleging a violation of
the Act or this Part.
<2) For a period ending 25 months
after the date a creditor notifies an ap­
plicant of adverse action taken with re­
spect to an account other than in con­
nection with an application, the creditor
shall retain as to the account, in original
form or a copy thereof: ls
(i) Any written or recorded informa­
tion concerning such adverse action, and
(ii) Any written statement submitted
by the applicant alleging a violation of
the Act or this Part.
(3) In addition to the requirements of
subsection (b) <1) and (2), any creditor
which has actual notice that it is under
investigation or is subject to an enforce­
ment proceeding for an alleged viola­
tion of the Act or this Part by an en­
forcement agency charged with monitor­
ing that creditor’s compliance with the
Act and this Part, or which has been
served with notice of an action filed pur­
suant to section 706 of the Act and § 202.Kc> of this section shall retain the in­
formation required in paragraphs (b)
• 1) and (2 > until final disposition of the
matter, unless an earlier time is allowed
by order of the agency or court.
(4) In any transaction involving more
than one creditor, any creditor which
does not have to comply with § 202.9 be­
cause of credit accepted by the applicant
shall retain for the time period speci­
fied in paragraph (b) of this section all
written or recorded information concern­
ing the applicant, including a notation of
action taken in connection with any ad­
verse action.
5.
Information required to be retained
in accordance with paragraphs (b)(1)
and (2) of this section in a transaction
involving an application for credit other
than consumer credit need only be re­
tained for 3 months after the date the
creditor notifies an applicant of action
on an application or of adverse action
taken other than in connection with an
application, unless during that period the
creditor receives a written request from
the applicant to retain such information,
and need thereafter only be retained in
accordance with this subsection.

under sections 701 and 702 of the Act and
the corresponding provisions of this
Part, or that applicants are afforded
greater protection than is afforded under
sections 701 and 702 of the Act and the
corresponding provisions of this Part;
and
(ii) There is adequate provision for
enforcement.
(2) The procedures and criteria under
which any State may apply for the de­
termination provided for in paragraph
(d) (1) are set forth in Supplement I to
this Part.
(3) In order to assure that the con­
current jurisdiction of Federal and State
courts created in section 706(f) of the
Act shall continue to have substantive
provisions to which such jurisdiction
shall apply, and generally to aid in im­
plementing the Act and to allow federal
enforcement agencies to retain their au­
thority with respect to any class of credit
transactions exempted pursuant to para­
graph (d)(1) and Supplement I:
(i) No such exemptions shall be
ddemed to extend to the civil liability
provisions of section 706; and
(ii) After an exemption has been
granted, the requirements of the appli­
cable State law shall constitute the re­
quirements of the Act and this Part,
except to the extent that such State law
imposes requirements not imposed by the
Act and this Part.
(4) Exemptions granted by the Board
to particular classes of credit transac­
tions within specified States are set forth
in Supplement II to this Part.
§ 202.12

Record Retention.

(a) Retention of prohibited, informa­
tion. Retention in a creditor’s files of any
information prohibited by the Act or this
P art in evaluating applications does not
violate the Act or this Part where such
information was obtained:
(1) From any source prior to March
23, 1977; or
(2) At any time from credit reporting
agencies; or
(3) At any time from the applicant or
others, without the specific request of the
creditor; or
(4) At any time as required to monitor
compliance with the Act and this Part
or other law.
(b) Preservation of records. (1) F o ra
period ending 25 months after the date a
creditor notifies an applicant of action
on an application, the creditor shall re­
tain as to an applicant, in original form
or a copy thereof: 17
(i) Any application form, any infor­
mation required to be obtained concern­
ing characteristics of an applicant to
monitor compliance with the Act and
this Part or other law, and any other
written or recorded information used in
evaluating an application and not re­

§ 202.13 Information
purposes.111

for

monitoring

<a) Scope and information requested.
<l ) For the purpose of the enforcement

10 Pursuant to present Regulation B, the
date for sex and marital status Information
Is June 30, 1976.
» A creditor who uses a computerized sys­
tem need not keep a written copy of a docu­
ment If it can regenerate the precise text of
the document In relation to an applicant
upon request-

18

"■See footnote 17.
’"This section constitutes an example of
how information for monitoring purposes
might be required to be obtained if the Board
ultimately decides that such data should be
gathered. It does not constitute a specific
proposal of the Board on the merits of the
question or as to format.

agencies’ monitoring compliance with
the provisions of the Act and this Part,
any creditor that receives an applica­
tion for consumer credit for the purpose
of the purchase of residential real prop­
erty where the extension of credit is to
be secured by a lien on such property
shall request as part of any written ap­
plication for such credit the following in­
formation regarding the applicant:
(1) Name;
(ii) Sex and marital status <married,
unmarried, separated);
(iii) Race;
(iv) Age;
(v) Periodic income, including, if dis­
closed by the applicant in accordance
with this Part, alimony, child support,
and maintenance income;
(vi) Mailing address of the real prop­
erty proposed as collateral; and
(vii) The amount of credit for which
application is made.
(2) “Residential real property'’ means
any structure or portion thereof that is
occupied as, or is designed or intended
for occupancy as, a residence for one to
four families.
(b) Method of obtaining information.
The information obtained pursuant to
the provisions of paragraph (a) of this
section may be listed, at the creditor’s
option, either on the application form or
on a separate form that refers to the
application.
(c) Disclosure to applicant. Regarding
information requested about the appli­
cant’s race and sex, the applicant shall
be informed that the information is be­
ing requested by the federal government
for the purpose of monitoring compli­
ance with federal anti-discrimination
statutes and that those statutes prohibit
creditors from discriminating against
applicants on the basis of race and sex.
The applicant shall be asked but not re­
quired to supply the requested informa­
tion. If the applicant chooses not to pro­
vide that information or any part of it, it
shall be supplied, to the extent reason­
ably feasible, by the creditor based upon
observation; and such fact shall be noted
on the form on which the information is
obtained.
A ppendix A —

C r e d ito r s
S u b je c t
B o a r d —Director,

C iv il

A e r o n a u tic s

C r e d ito r s S u b j e c t t o I n t e r s t a t e C o m m e r c e
C o m m is s io n —Office of Proceedings, Inter­

state Commerce Commission, Washington,
D.C. 20523.

C r e d ito r s S u b je c t t o P a c k e r s a n d S to c k y a r d s
A c t —Nearest Packers and Stockyards Ad­

ministration area supervisor.

R e ta il, D e p a r tm e n t S to r e s , C o n s u m e r F i­
n a n c e C o m p a n ie s , A ll o th e r C r e d ito r s , a n d
A ll N o n b a n k C r e d it C a r d I s s u e r s (Lenders

operating on a local or regional basis
should use the address of the F.T.C. Re­
gional Office in which they operate) —
Federal Trade Commission, Washington,
D.C. 20580L
S m a ll B u s in e s s I n v e s t m e n t C o m p a n ie s —U.S.
Small Business Administration, 1441 L
Street, NW., Washington, D.C. 20416.
B r o k e r s a n d D e a le r s —Securities and Ex­
change Commission, Washington, D.C.
205*9.
F e d e ra l L a n d B a n k s , F e d e ra l L a n d B a n k Ass o c ia tio n s , F e d e r a l I n t e r m e d i a t e C r e d it
B a n k s a n d P r o d u c tio n C r e d it A s s o c ia ­
t io n s —Farm Credit Administration, 490

L’Enfant Plaza, SW., Washington, D.C.
20578.
Appen d ix B
N o t e .—There are two sample fo rm s con­
tained in this Appendix—one for open end,
unsecured credit and one for closed end,
secured credit. If a creditor offering an open
end account wishes to relate the sample open
end form to secured credit, then it should
delete the note in the marital status block
“Complete Only if Joint Account" and add
after the Co-Applicant section a section re­
lating to a description of the collateral
offered. Conversely, if a creditor offering
closed end credit wishes to relate the sample
closed end form to unsecured credit, then it
should insert in the marital status block (as
indicated on the open end, unsecured credit
form) the note “Complete Only if Joint Ac­
count" and delete the section relating to a
description of the collateral offered.
If an applicant voluntarily discloses on an
application the receipt of alimony, child sup­
port, or separate maintenance and a creditor
wishes to inquire further about that income
and the spouse or former spouse who pays
it, the creditor may insert at the end of the
“Note” in the instructions relating to ali­
mony, child support, and separate mainte­
nance the following sentences: “If you
choose to disclose such income, complete the
Co-Applicant section to the extent that you
can regarding your spouse or former spouse
who makes those payments. If you need to
complete the Co-Applicant section for any
other reason stated above, list the requested
information about your spouse or former
spouse on a separate page.” In addition, the
creditor may insert in the “Alimony and
similar Income” block, after the disclosure
notice, the following: “Received Under:
Court Order [ ] Written Agreement [ ]
Verbal Understanding [ ]”.
If a creditor is operating in a community
property State, then it should modify the
second instruction, inserting after the words
“relying on the income of a spouse or another
person", the phrase “or community prop­
erty”. Similarly, the creditor should change
the last designation of the type of account
or credit extension on the upper, left-hand
side of the form to read: “ [ ] Individual
Account |or, Credit] Relying on Income of
Spouse or Another Person or Community
Property”. Finally, such a creditor should
delete any reference in the marital status
block to the note “Complete Only if Joint
Account”.

F e d e r a l E n f o r c e m e n t A cf . n c i f s

T h e fo llo w in g l i s t i n d i c a t e s w h ic h f e d e r a l
a g en cy e n fo rc e s R e g u la tio n B fo r p a rtic u la r
c la s s e s o f c r e d ito r s . A n y q u e s t i o n s c o n c e r n ­
in g a p a r t i c u l a r c r e d ito r s h o u ld b e d ir e c te d
to its e n fo rc e m e n t agency.
N a tio n a l B a n k s — C o m p tr o lle r o f t h e C u r ­
re n c y , W a s h in g to n , D .C . 20219.
S t a t e M e m b e r B a n k s — F e d e r a l R e s e rv e B a n k
s e r v in g t h e a r e a in w h ic h t h e S t a t e m e m ­
b e r b a n k is lo c a te d .
N o n m e m b e r I n s u r e d B a n k s — F e d e r a l D e p o s it
I n s u r a n c e C o r p o r a tio n R e g io n a l D ir e c to r
f o r t h e R e g io n in w h ic h t h e n o n m e m b e r
i n s u r e d b a n k is lo c a te d .
S a v in g s I n s t i t u t i o n s I n s u r e d b y th e F SL IC
a n d M e m b e r s o f th e F H L B S y s te m ( e x c e p t
f o r S a v in g s B a n k s in s u r e d b y F D I C )— 'T h e
F H L B B ’s S u p e r v is o r y A g e n t I n t h e F e d e ra l
H o m e L o a n B a n k D is tr ic t In w h ic h t h e i n ­
s t i t u t i o n is lo c a te d .
F e d e ra l C r e d it U n io n s — R e g io n a l Office o f
the N a tio n a l C r e d it U n io n A d m i n i s t r a t i o n
s e r v in g t h e a r e a i n w h ic h t h e F e d e ra l
C r e d it U n io n is lo c a te d .




to

Bureau of Enforcement,
Civil Aeronautics Board. 1825 Connecticut
Avenue, NW., Washington, D.C. 20428.

19

APPLICATION FOR OPEN END,
UNSECURED CREDIT
IM PO RTA N T: R E AD THESE DIRECTIONS BEFORE COMPLETING APPLICATIO N

APPLICANT

If this is an application for an individual account and you are relying on your own income and not the income of •
spouse or another person as a basis for the extension and repayment o f the credit requested, complete only the
Applicant section and sign the application.

(Please Check Each Applicable Box)
D InchviJu.u Account
r : l o i r ; Ac count
□ A 'oh
/td User Account
[ ' Individ;..:! Account, Relying on
lc nit >C Sp«>’i-.»: or

If this is an application for a joint account or an account that another person will also be authorized to use, or if this
is an application for an individual account but you are relying on the income o f a spouse or another person as a basis
for the extension and repayment of the credit requested, both the Applicant and Co-Applicant sections should be
completed. If this is an application for a joint account, both parties should sign the application.

Ac nhet Pet o n

NOTE: Any income you receive from alimony, child support, or separate maintenance is your own income and not the
income o f a spouse or another person for purposes of this application. Disclosure o f such income is voluntary, as stated

Complete ONLY if Joint Account

(Title is Optional!
MS. r , MISS ! !
MR. T MRS. [J
OTHER .................

First

Lust Name

M AR ITAL
STATUS

M . 1.

DEBTS

No.

Institution

SAVINGS
ACCT.

Zip

(Inc

Auto, Bank, Finance Co , Retail, Etc )

Business Phone

Home Phone

PHONE NOS.

C reditor's Name

Address

Acct. No.

Mo. Pymt.

Bal.

N o. o f Dependents

AGE

Rent

□

Board □

Own

Individually □

Jointly □

Live With Parents □
OTHER
O B LIG A ­
TIONS

NAM E OF
i .a n d i o r d
Sir)!' 1 ' .AGE

OR

M O N TH LY RENT
OR MORTGAGE
P.V i MEN r

Est.

Mtg

Have You Gone Through Bankruptcy In Past 7 Years?
Yes □

State

Address

Time There

CO-APPLICANT

Dep(./Em ployee No.

S

Position

Time There

Name

ADDRESS

Address

EM PLO YER

Alimony, child support, Or separate
maintenance income need not b e
listed unless you choose to have such
income considered regarding exten­
sion and repayment o£ the credit
requested.
Monthly Amount

A«e

Relationship

NAM E

SALARY

Time There
........ Yrs......... Mos.
Social Security No.
(OPTIONAL)

Monthly
Amount

M ON TH LY
S A LA R Y

i

I/W E CERTIFY TH A T THE ABOVE INFORM ATIO N IS COMPLETE AN D
AC CU RA TE A N D IS PROVIDED FOR THE PURPOSE OF OBTAINING
CRED IT. I/W E AU TH O RIZE A CRED IT INVESTIGATION .

.............

Source

OF INCOME
SOCIAL SECURITY
NUMBER
(OPTION AL)

W h e n ....................................

Name

..... .............................. Yrs.............. Mos.

EMPLOYER'S
ADDRESS

OTHER SOURCES

No □

N AM E AN D ADDRESS
O F N E A R E ST RE LA TIV E
(NO T LIV IN G W ITH YOU)

Zip

EMPLOYER'S

A L IM O N Y AND
SIM ILA R INCOME

Child Support, Maintenance,

Balance

Time There

N AM E

FORMER
EMPLOYER

Pay Alimony,

Attach Additional Page If You Need More Space
Value of
Home

HOME

MONTHLY

(E g , Liability to
Legal Judgments)

f

City




No.

......................... Yrs............... Mos.
State

City

PREVIOUS
A1 jUR t.SS

Unmarried (Inc
Divorced and Widowed) D

CHECKING
ACCT,

Time There

HOME
ADDRESS

Separated □

Married

l»w w w i i w w u w m m t w w

A P P L IC A N T S
SIG N A TU RE ...

DATE

CO -APPLICANT’ S
SIG N A TU RE - .......

DATE

20

- 90 -

APPLICATION FOR CLOSED END,
SECURED CREDIT
APPLICANT

IM PO RTA N T: R E AD THESE DIRECTIONS BEFORE COM PLETIN G APPLICATIO N ,
I f this is an application fo r individual credit and you are relying on your own income and not the income o f a
spouse or another person as a basis for the extension and repayment o f the credit requested, complete only the Applicant
section and sign the application.

(Please Check One)
□ Individual Credit

□ Joint Credit
□

Individual Credit Relying
on Income o f Spouse or
Another Person

I f this is an application for joint credit or if this is an application for individual credit but you are relying on the income
o f a spouse or another person as a basis for the extension and repayment o f the credit requested, both the Applicant and
Co-Applicant sections should be completed. If this is an application for joint credit, both parties Should sign the appli­
cation.
N OTE: Any income you receive from alimony, child support, or separate maintenance is your own income and not the,
income o f a spouse or another person for purposes o f this application. Disclosure o f such ihcome is voluntary, as stated
below.

(Title is
MS. Q
M R. d
OTHER

O ptional)
MISS □
Last Name
First
M. I.
MRS. □
............................................................................................................................

(Inc. Auto, Bank, Finance Co., Retail, Etc.)

Creditor's Name

Address

Acct. N o.

M o. Pymt.

Bal.

Time There

HOM E
ADD RESS

..........Yrs ........
City

PHONE NOS.

DEBTS

State

Mot.

Zip

Home Phone

AG E

No. of Dependents

Rent □
Board p
N AM E OF
LA N D LO RD OR
‘M OR TG A G E
H OLDER

Own Individually [ j

OBI IG A TIONS

Jointly □

(E g-- M abili,y <0 Pay Alimony,
Legal Judgments)

Child Support,

Maintenance,

Live With Parents □
Attach Additional Page If You Need More S pace...............
Have You Gone Through Bankruptcy In Past 7 Years?

......................................................................

Yes □

Est. Value o f

M ON TH LY RENT
OR M ORTG AG E
PA YM E N T

No P

NAM E AN D ADDRESS
OF NEAREST RE LA TIVE
(NOT LIVIN G W ITH YOU )

Mig. Balance

Home

■$.................. $..............

W h e n ....................................

Name
...........
Address

Time There

PREVIOUS HOME
ADDRESS

.. Yrs............. Mos.
City

State

Zip

CO-APPLICANT

Time There

EM PLOYER'S
N AM E

Age

Relationship

. Yrs.............Mos.
Dept

EM PLOYER'S
ADDRESS
M O N T H IY
SA LA RY

$

FORMER
EM PLOYER

Name

NAM E

Employee No.

ADDRESS

Position

Time There

Em p l o y e r
Time There
Yrs .

.......................................................................... Yrs............M os.

M os.
MONTHLY

SALARY

Address

Social Security N o.
(OPTION AL)

$

DESCRIPTION OF PR OPER TY SECURING CRED IT
ALIM O N Y A N D
SIM ILAR INCOM E

Alimony, child support, or separate
maintenance income need not be
listed unless you choose to have such
income considered regarding exten­
sion and repayment o f the credit
requested.

OTHER SOURCES
OF INCOM E

Monthly Amount
»

SOCIAL

Monthly
Amount

$

.......................

Source

SECURITY

NUMBER

(OPTION AL)

Is or will property be co-ow ned? Yes Q
.......................................................................................................

M A R IT A L

Married □

CH ECKING
A C CT .

Institution

No.

SAVINGS

Institution

No.

SJAIUS

ACCT.




Separated □

Unmarried (Inc.

Divorced andWtdowcd) □

No □

If yes, name o f co-owner: ......................................
I/W E CERTIFY T H A T THE ABOVE INFORM ATION IS COMPLETE A N D
AC CU RA TE AN D IS PR OV IDE D FOR THE PURPOSE OF OBTAININ G
CREDIT. I/W E AU TH O RIZE A CRED IT INVESTIGATION .

APPLICANT’S
SIGNATURE............................................. DATE......................
CO-APPLICANT’S
SIGNATURE............................................. DATE........... .........

21

To aid in the consideration of this
m atter by the Board, Interested persons
are invited to submit relevant data or
comments. Members of the public are
urged to comment not only on provisions
they believe should be changed or added,
but also on proposed provisions they be­
lieve should remain in the regulation. All
comments should be submitted in writ­
ing to the Secretary, Board of Governors
of the Federal Reserve System, Washing­
ton, D.C. 20551, to be received not later
than September 1, 1976. Written com­
ments will be made available for public
inspection and copying upon request ex­
cept as provided in section 261.6(a) of
the Board’s rules regarding availability
of information (12 CFR 261). All mate­




rial submitted should include the docket
number R-0031.
A hearing will be held before available
members of the Board on the terrace
floor of the Board’s building on 20th and
C Streets, NW„ Washington, D.C. on
August 12, 1976 beginning at 9 a.m. The
hearing will be continued on the after­
noon of August 13 if necessary.
The proceeding will consist of presen­
tation of statements in oral or written
form. Interested persons need not par­
ticipate in the hearing in order to have
their views considered.
Any person wishing to testify at the
hearing should file with the Secretary of
the Board at the address set forth above
on or before August 6, 1976, a written
request containing a statement of the

22

nature of the petitioner’s interest in the
proceedings, a summary of the matters
concerning which the petitioner wishes
to give testimony and the name and
identity of witnesses who propose to ap­
pear. All requests to appear at the hear­
ing also should include the docket num­
ber R-0031.
This notice of proposed rulemaking is
published pursuant to the Board’s au­
thority under section 703 (a) of the Equal
Credit Opportunity Act (15 U.S.C. 1691b).
By order of the Board of Governors,
July 14, 1976.
[ seal]
T heodore E. A llison ,
Secretary of the Board.
[FR Doc.76-20918 Filed 7-19-76;8:45 am)