I addressed the issue of required language in a consumer contract under the Fair Credit Reporting Act last week.  This week I want to talk about required language in the Credit Application.

I have written about the credit application at least twice:  See Back to Basics Continued—Credit Extension and Back to Basics Continued—Credit Applications. I have also discussed the Equal Credit Opportunity Act in many blogs including the topics of adverse action notices and requiring spouses as co-obligors or guarantors—please don’t do that!

There are a few specific language requirements in drafting the Credit Application:

1. You must alert the applicant that alimony, child support and separate maintenance income need not be disclosed if the applicant does not want such considered in determining the applicant’s credit worthiness.
2. If the application designates information concerning courtesy titles – Mr., Mrs., Miss, or Ms. – there must be a disclosure that courtesy titles* are optional at the discretion of the applicant.
3. Questions asking about marital status should not be asked unless there is a disclosure that the question is based upon the applicant’s reliance upon his or her spouse’s income or the applicant resides in a community property state.

These matters do not go to the creditworthiness of the applicant.  Therefore, the application should stay far away from these subject matters. 

There are tangential matters that can be elicited by asking in the right way.  For example, you may inquire about the permanence of public assistance income and the residency status of an applicant, as these matters go to the issue of continuity of payment.   So, even though you may not make an adverse credit decision based upon an applicant’s national origin, or an applicant’s receipt of public assistance income, you are entitled to know whether the applicant will be a long-term resident of the country, and whether the applicant’s public assistance income is susceptible to being disrupted. 

Please Note: This is the two hundred-thirty-fifth 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.

*See Courtesy Titles (chinet.com) for a fun discussion of British courtesy titles including Duke, Duchess, Earl, Viscount, Honourable [the British spelling], and Lady.  Alas, we American commoner cousins just don’t rate!