2020Directory_FNL_FlippingBook

all applicants for credit a disclosure of their credit score and certain other information, i.e., the date and identity of the person providing the credit score; the national distribution of credit scores among consumers under the credit scoring model used, disclosed in either a bar chart form or in language indicating where the customer falls in the national range of credit scores; and certain language disclosures about credit scores in general. CSD Notices are easily obtained from consumer reporting agencies (e.g., Experian, TransUnion, Equifax, Credco, etc.), and should be provided to every credit applicant as soon as possible after obtaining the credit score but no later than the consummation of the transaction. If you use multiple credit scores, you must disclose the one on which you most relied. If you didn’t primarily rely on one, you can disclose any one of the multiple scores. If a consumer does not have a credit score, you must give that consumer a special form alternative notice stating that no score was available. Notably, the CSD Notice exception does not require disclosing the four to five “key factors”that adversely affected the credit score. The “key factors”disclosure is only required for adverse action notices. What if your dealership doesn’t ordinarily need to pull credit reports or credit scores? Your lender may still expect you to handle this requirement as the initial creditor, and this may require you to buy a credit score anyway. Security Freeze Laws All consumers can now freeze their credit files by contacting most consumer reporting agencies, including the three nationwide credit bureaus: Equifax, Experian, and TransUnion. If a customer freezes her credit file, you will be unable to pull her credit report (including her credit score) unless she “thaws” the credit freeze with the credit bureau. If a customer calls the credit bureau to disable the freeze, the report should be available in a relatively short amount of time. If a customer submits a written request to disable the freeze, the process could take up to several days after receipt of the request. Truth in Lending Act (TILA) Requirements TILA, the federal Consumer LeasingAct (CLA, a subsectionofTILA), and their implementing regulations, Regulations Z and M respectively, govern disclosures of credit terms to consumers. TILA and CLA disclosures must be given prior to consummation of the transaction. TILA and state laws also contain disclosure and other requirements for credit applications and consumer credit contracts. Many state laws cap Annual Percentage Rates (APRs) and other charges as do the federal Service members Civil Relief Act and Military Lending Act discussed below. TILA and Regulation Z, and CLA and Regulation M, do not apply to credit transactions and consumer leases in excess of the then-current amount of the cap. However, it is a best practice to comply with TILA and the CLA regardless of the amount of the obligation on all credit transactions and consumer leases. A number of states require compliance with TILA on all credit transactions, regardless of the credit amount. TILA generally treats costs of retail installment sales as either part of the amount financed (simplistically, the price of the goods or services financed by the consumer) or as a finance charge (simplistically, the cost to the consumer to finance payment of the goods or services): • Amount financed: Examples of required disclosures in retail installment sales contracts (RISCs) for the cost of the goods or services financed are the amount financed and an itemization of the amount financed. The amount financed includes the cash price of goods or services purchased on credit, and non-finance charge amounts advanced by the dealer to the consumer or paid to others on the consumer’s behalf, such

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199 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE