Early in this Back to Basics blog series, I wrote about the credit extension process. That blog can be accessed here. I mentioned in that blog that the Equal Credit Opportunity Act (ECOA) and Regulation B are instructive with respect to evaluating and handling credit applications, including creditor obligations concerning granting and declining credit to applicants.

I also mentioned that one of the best features of Regulation B is that it provides four sample credit applications in Appendix B to the Regulation that creditors may use in various transactions. See this link for the sample applications. While these form applications are not given true “safe harbor” status, the use of the forms does set the right direction for a creditor in proving compliance with the ECOA.

Interestingly, there are subtle differences in the four sample applications. Make certain that the application format that you are using matches the type of credit that you are extending. For example, if you are extending individual credit, your application form may not ask for the marital status of the applicant. But, if the credit sought is for joint secured or joint unsecured credit, it may. If you are offering unsecured credit, the questions that may be asked differ from offering secured credit. Use the model form credit application under Regulation B that matches up to the type of loan or credit sale that you are offering.

Also, be sure to steer clear from asking questions that are not included in the appropriate model form. That is, encourage your CSRs not to stray from the requests for the information solicited from applicants in the form applications.

Please Note: This is the seventy-second blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking Dentons - Consumer Finance Report.