Question 14
Domain 1: Federal Mortgage-Related LawsWhen a lender denies a mortgage application based on credit report information, the adverse action notice must include all of the following EXCEPT:
Correct answer: C
Explanation
Under the Fair Credit Reporting Act, an adverse action notice must identify the credit bureau used, state the applicant’s right to a free report and to dispute accuracy, and provide the credit score and key factors if a score was used. It does not require a "detailed explanation of why the score is low"; the law requires only the "key factors" affecting the score.
Why each option is right or wrong
A. The credit score used in the decision
B. The name and contact information of the CRA
C. A detailed explanation of why the score is low
Under the Fair Credit Reporting Act, 15 U.S.C. § 1681m(a) and the credit-score disclosure rules in 15 U.S.C. § 1681g(f), an adverse action notice based on a consumer report must identify the CRA used, state the consumer’s right to obtain a free copy and dispute inaccuracies, and, if a score was used, disclose the score plus the key factors that adversely affected it. The statute does not require a narrative or detailed explanation of why the score is low; only the principal factors must be provided, so that item is the exception.
D. The key factors that adversely affected the score