Title 12--Banks and Banking

CHAPTER II--FEDERAL RESERVE SYSTEM

PART 202--EQUAL CREDIT OPPORTUNITY (REGULATION B)

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Sec. 202.1 Authority, scope and purpose.
    

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Sec. 202.2 Definitions.
     

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Sec. 202.3 Limited exceptions for certain classes of transactions.
     

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    A creditor shall not discriminate against an applicant on a 
prohibited basis regarding any aspect of a credit transaction

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    (a) Discouraging applications. A creditor shall not make any oral or 
written statement, in advertising or otherwise, to applicants or 
prospective applicants that would discourage on a prohibited basis a 
reasonable person from making or pursuing an application.
    (b) General rules concerning requests for information. (1) Except as 
provided in paragraphs (c) and (d) of this section, a creditor may 
request any information in connection with an application.\1\
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    \1\ This paragraph does not limit or abrogate any federal or state 
law regarding privacy, privileged information, credit reporting 
limitations, or similar restrictions on obtainable information.
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    (2) Required collection of information. Notwithstanding paragraphs 
(c) and (d) of this section, a creditor shall request information for 
monitoring purposes as required by Sec. 202.13 for credit secured

[[Page 20]]

by the applicant's dwelling. In addition, a creditor may obtain 
information required by a regulation, order, or agreement issued by, or 
entered into with, a court or an enforcement agency (including the 
Attorney General of the United States or a similar state official) to 
monitor or enforce compliance with the act, this regulation, or other 
federal or state statute or regulation.
    (3) Special purpose credit. A creditor may obtain information that 
is otherwise restricted to determine eligibility for a special purpose 
credit program, as provided in Sec. 202.8 (c) and (d).
    (c) Information about a spouse or former spouse. (1) Except as 
permitted in this paragraph, a creditor may not request any information 
concerning the spouse or former spouse of an applicant.
    (2) Permissible inquiries. A creditor may request any information 
concerning an applicant's spouse (or former spouse under paragraph 
(c)(2)(v) of this section) that may be requested about the applicant if:
    (i) The spouse will be permitted to use the account;
    (ii) The spouse will be contractually liable on the account;
    (iii) The applicant is relying on the spouse's income as a basis for 
repayment of the credit requested;
    (iv) The applicant resides in a community property state or property 
on which the applicant is relying as a basis for repayment of the credit 
requested is located in such a state; or
    (v) The applicant is relying on alimony, child support, or separate 
maintenance payments from a spouse or former spouse as a basis for 
repayment of the credit requested.
    (3) Other accounts of the applicant. A creditor may request an 
applicant to list any account upon which the applicant is liable and to 
provide the name and address in which the account is carried. A creditor 
may also ask the names in which an applicant has previously received 
credit.
    (d) Other limitations on information requests--(1) Marital status. 
If an applicant applies for individual unsecured credit, a creditor 
shall not inquire about the applicant's marital status unless the 
applicant resides in a community property state or is relying on 
property located in such a state as a basis for repayment of the credit 
requested. If an application is for other than individual unsecured 
credit, a creditor may inquire about the applicant's marital status, but 
shall use only the terms married, unmarried, and separated. A creditor 
may explain that the category unmarried includes single, divorced, and 
widowed persons.
    (2) Disclosure about income from alimony, child support, or separate 
maintenance. A creditor shall not inquire whether income stated in an 
application is derived from alimony, child support, or separate 
maintenance payments unless the creditor discloses to the applicant that 
such income need not be revealed if the applicant does not want the 
creditor to consider it in determining the applicant's creditworthiness.
    (3) Sex. A creditor shall not inquire about the sex of an applicant. 
An applicant may be requested to designate a title on an application 
form (such as Ms., Miss, Mr., or Mrs.) if the form discloses that the 
designation of a title is optional. An application form shall otherwise 
use only terms that are neutral as to sex.
    (4) Childbearing, childrearing. A creditor shall not inquire about 
birth control practices, intentions concerning the bearing or rearing of 
children, or capability to bear children. A creditor may inquire about 
the number and ages of an applicant's dependents or about dependent-
related financial obligations or expenditures, provided such information 
is requested without regard to sex, marital status, or any other 
prohibited basis.
    (5) Race, color, religion, national origin. A creditor shall not 
inquire about the race, color, religion, or national origin of an 
applicant or any other person in connection with a credit transaction. A 
creditor may inquire about an applicant's permanent residence and 
immigration status.
    (e) Written applications. A creditor shall take written applications 
for the types of credit covered by Sec. 202.13(a), but need not take 
written applications for other types of credit.

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    (a) Providing appraisals. A creditor shall provide a copy of the 
appraisal report used in connection with an application for credit that 
is to be secured by a lien on a dwelling. A creditor shall comply with 
either paragraph (a)(1) or (a)(2) of this section.
    (1) Routine delivery. A creditor may routinely provide a copy of the 
appraisal report to an applicant (whether credit is granted or denied or 
the application is withdrawn).
    (2) Upon request. A creditor that does not routinely provide 
appraisal reports shall provide a copy upon an applicant's written 
request.
    (i) Notice. A creditor that provides appraisal reports only upon 
request shall notify an applicant in writing of the right to receive a 
copy of an appraisal report. The notice may be given at any time during 
the application process but no later than when the creditor provides 
notice of action taken under Sec. 202.9 of this part. The notice shall 
specify that the applicant's request must be in writing, give the 
creditor's mailing address, and state the time for making the request as 
provided in paragraph (a)(2)(ii) of this section.
    (ii) Delivery. A creditor shall mail or deliver a copy of the 
appraisal report promptly (generally within 30 days) after the creditor 
receives an applicant's request, receives the report, or receives 
reimbursement from the applicant for the report, whichever is last to 
occur. A creditor need not provide a copy when the applicant's request 
is received more than 90 days after the creditor has provided notice of 
action taken on the application under Sec. 202.9 of this part or 90 days 
after the application is withdrawn.
    (b) Credit unions. A creditor that is subject to the regulations of 
the National Credit Union Administration on making copies of appraisals 
available is not subject to this section.
    (c) Definitions. For purposes of paragraph (a) of this section, the 
term dwelling means a residential structure that contains one to four 
units whether or not that structure is attached to real property. The 
term includes, but is not limited to, an individual condominium or 
cooperative unit, and a mobile or other manufactured home. The term 
appraisal report means the document(s) relied upon by a creditor in 
evaluating the value of the dwelling.

[58 FR 65661, Dec. 16, 1993]

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    (a) General rule concerning use of information. Except as otherwise 
provided in the Act and this regulation, a creditor may consider any 
information obtained, so long as the information is not used to 
discriminate against an applicant on a prohibited basis.\2\
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    \2\ The legislative history of the Act indicates that the Congress 
intended an ``effects test'' concept, as outlined in the employment 
field by the Supreme Court in the cases of Griggs v. Duke Power Co., 401 
U.S. 424 (1971), and Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975), 
to be applicable to a creditor's determination of creditworthiness.
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    (b) Specific rules concerning use of information. (1) Except as 
provided in the act and this regulation, a creditor shall not take a 
prohibited basis into account in any system of evaluating the 
creditworthiness of applicants.
    (2) Age, receipt of public assistance. (i) Except as permitted in 
this paragraph (b)(2), a creditor shall not take into account an 
applicant's age (provided that the applicant has the capacity to enter 
into a binding contract) or whether an applicant's income derives from 
any public assistance program.
    (ii) In an empirically derived, demonstrably and statistically 
sound, credit scoring system, a creditor may use an applicant's age as a 
predictive variable, provided that the age of an elderly applicant is 
not assigned a negative factor or value.
    (iii) In a judgmental system of evaluating creditworthiness, a 
creditor may consider an applicant's age or whether an applicant's 
income derives from any public assistance program only for the purpose 
of determining a pertinent element of creditworthiness.
    (iv) In any system of evaluating creditworthiness, a creditor may 
consider the age of an elderly applicant when such age is used to favor 
the elderly applicant in extending credit.
    (3) Childbearing, childrearing. In evaluating creditworthiness, a 
creditor shall not use assumptions or aggregate

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statistics relating to the likelihood that any group of persons will 
bear or rear children or will, for that reason, receive diminished or 
interrupted income in the future.
    (4) Telephone listing. A creditor shall not take into account 
whether there is a telephone listing in the name of an applicant for 
consumer credit, but may take into account whether there is a telephone 
in the applicant's residence.
    (5) Income. A creditor shall not discount or exclude from 
consideration the income of an applicant or the spouse of an applicant 
because of a prohibited basis or because the income is derived from 
part-time employment or is an annuity, pension, or other retirement 
benefit; a creditor may consider the amount and probable continuance of 
any income in evaluating an applicant's creditworthiness. When an 
applicant relies on alimony, child support, or separate maintenance 
payments in applying for credit, the creditor shall consider such 
payments as income to the extent that they are likely to be consistently 
made.
    (6) Credit history. To the extent that a creditor considers credit 
history in evaluating the creditworthiness of similarly qualified 
applicants for a similar type and amount of credit, in evaluating an 
applicant's creditworthiness a creditor shall consider:
    (i) The credit history, when available, of accounts designated as 
accounts that the applicant and the applicant's spouse are permitted to 
use or for which both are contractually liable;
    (ii) On the applicant's request, any information the applicant may 
present that tends to indicate that the credit history being considered 
by the creditor does not accurately reflect the applicant's 
creditworthiness; and
    (iii) On the applicant's request, the credit history, when 
available, of any account reported in the name of the applicant's spouse 
or former spouse that the applicant can demonstrate accurately reflects 
the applicant's creditworthiness.
    (7) Immigration status. A creditor may consider whether an applicant 
is a permanent resident of the United States, the applicant's 
immigration status, and any additional information that may be necessary 
to ascertain the creditor's rights and remedies regarding repayment.
    (c) State property laws. A creditor's consideration or application 
of state property laws directly or indirectly affecting creditworthiness 
does not constitute unlawful discrimination for the purposes of the Act 
or this regulation.

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    (a) Individual accounts. A creditor shall not refuse to grant an 
individual account to a creditworthy applicant on the basis of sex, 
marital status, or any other prohibited basis.
    (b) Designation of name. A creditor shall not refuse to allow an 
applicant to open or maintain an account in a birth-given first name and 
a surname that is the applicant's birth-given surname, the spouse's 
surname, or a combined surname.
    (c) Action concerning existing open-end accounts--(1) Limitations. 
In the absence of evidence of the applicant's inability or unwillingness 
to repay, a creditor shall not take any of the following actions 
regarding an applicant who is contractually liable on an existing open-
end account on the basis of the applicant's reaching a certain age or 
retiring or on the basis of a change in the applicant's name or marital 
status:
    (i) Require a reapplication, except as provided in paragraph (c)(2) 
of this section;
    (ii) Change the terms of the account; or
    (iii) Terminate the account.
    (2) Requiring reapplication. A creditor may require a reapplication 
for an open-end account on the basis of a change in the marital status 
of an applicant who is contractually liable if the credit granted was 
based in whole or in part on income of the applicant's spouse and if 
information available to the creditor indicates that the applicant's 
income may not support the amount of credit currently available.
    (d) Signature of spouse or other person--(1) Rule for qualified 
applicant. Except as provided in this paragraph, a creditor shall not 
require the signature of an applicant's spouse or other person, other 
than a joint applicant, on any credit instrument if the applicant 
qualifies under the creditor's standards

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of creditworthiness for the amount and terms of the credit requested.
    (2) Unsecured credit. If an applicant requests unsecured credit and 
relies in part upon property that the applicant owns jointly with 
another person to satisfy the creditor's standards of creditworthiness, 
the creditor may require the signature of the other person only on the 
instrument(s) necessary, or reasonably believed by the creditor to be 
necessary, under the law of the state in which the property is located, 
to enable the creditor to reach the property being relied upon in the 
event of the death or default of the applicant.
    (3) Unsecured credit--community property states. If a married 
applicant requests unsecured credit and resides in a community property 
state, or if the property upon which the applicant is relying is located 
in such a state, a creditor may require the signature of the spouse on 
any instrument necessary, or reasonably believed by the creditor to be 
necessary, under applicable state law to make the community property 
available to satisfy the debt in the event of default if:
    (i) Applicable state law denies the applicant power to manage or 
control sufficient community property to qualify for the amount of 
credit requested under the creditor's standards of creditworthiness; and
    (ii) The applicant does not have sufficient separate property to 
qualify for the amount of credit requested without regard to community 
property.
    (4) Secured credit. If an applicant requests secured credit, a 
creditor may require the signature of the applicant's spouse or other 
person on any instrument necessary, or reasonably believed by the 
creditor to be necessary, under applicable state law to make the 
property being offered as security available to satisfy the debt in the 
event of default, for example, an instrument to create a valid lien, 
pass clear title, waive inchoate rights or assign earnings.
    (5) Additional parties. If, under a creditor's standards of 
creditworthiness, the personal liability of an additional party is 
necessary to support the extension of the credit requested, a creditor 
may request a cosigner, guarantor, or the like. The applicant's spouse 
may serve as an additional party, but the creditor shall not require 
that the spouse be the additional party.
    (6) Rights of additional parties. A creditor shall not impose 
requirements upon an additional party that the creditor is prohibited 
from imposing upon an applicant under this section.
    (e) Insurance. A creditor shall not refuse to extend credit and 
shall not terminate an account because credit life, health, accident, 
disability, or other credit-related insurance is not available on the 
basis of the applicant's age.

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    (a) Standards for programs. Subject to the provisions of paragraph 
(b) of this section, the act and this regulation permit a creditor to 
extend special purpose credit to applicants who meet eligibility 
requirements under the following types of credit programs:
    (1) Any credit assistance program expressly authorized by federal or 
state law for the benefit of an economically disadvantaged class of 
persons;
    (2) Any credit assistance program offered by a not-for-profit 
organization, as defined under section 501(c) of the Internal Revenue 
Code of 1954, as amended, for the benefit of its members or for the 
benefit of an economically disadvantaged class of persons; or
    (3) Any special purpose credit program offered by a for-profit 
organization or in which such an organization participates to meet 
special social needs, if:
    (i) The program is established and administered pursuant to a 
written plan that identifies the class of persons that the program is 
designed to benefit and sets forth the procedures and standards for 
extending credit pursuant to the program; and
    (ii) The program is established and administered to extend credit to 
a class of persons who, under the organization's customary standards of 
creditworthiness, probably would not receive such credit or would 
receive it on less favorable terms than are ordinarily available to 
other applicants applying to the organization for a similar type and 
amount of credit.

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    (b) Rules in other sections. (1) General applicability. All of the 
provisions of this regulation apply to each of the special purpose 
credit programs described in paragraph (a) of this section unless 
modified by this section.
    (2) Common characteristics. A program described in paragraph (a)(2) 
or (a)(3) of this section qualifies as a special purpose credit program 
only if it was established and is administered so as not to discriminate 
against an applicant on any prohibited basis; however, all program 
participants may be required to share one or more common characteristics 
(for example, race, national origin, or sex) so long as the program was 
not established and is not administered with the purpose of evading the 
requirements of the act or this regulation.
    (c) Special rule concerning requests and use of information. If 
participants in a special purpose credit program described in paragraph 
(a) of this section are required to possess one or more common 
characteristics (for example, race, national origin, or sex) and if the 
program otherwise satisfies the requirements of paragraph (a) of this 
section, a creditor may request and consider information regarding the 
common characteristic(s) in determining the applicant's eligibility for 
the program.
    (d) Special rule in the case of financial need. If financial need is 
one of the criteria under a special purpose program described in 
paragraph (a) of this section, the creditor may request and consider, in 
determining an applicant's eligibility for the program, information 
regarding the applicant's martial status; alimony, child support, and 
separate maintenance income; and the spouse's financial resources. In 
addition, a creditor may obtain the signature of an applicant's spouse 
or other person on an application or credit instrument relating to a 
special purpose program if the signature is required by Federal or State 
law.

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    (a) Notification of action taken, ECOA notice, and statement of 
specific reasons--(1) When notification is required. A creditor shall 
notify an applicant of action taken within:
    (i) 30 days after receiving a completed application concerning the 
creditor's approval of, counteroffer to, or adverse action on the 
application;
    (ii) 30 days after taking adverse action on an incomplete 
application, unless notice is provided in accordance with paragraph (c) 
of this section;
    (iii) 30 days after taking adverse action on an existing account; or
    (iv) 90 days after notifying the applicant of a counteroffer if the 
applicant does not expressly accept or use the credit offered.
    (2) Content of notification when adverse action is taken. A 
notification given to an applicant when adverse action is taken shall be 
in writing and shall contain: a statement of the action taken; the name 
and address of the creditor; a statement of the provisions of section 
701(a) of the Act; the name and address of the Federal agency that 
administers compliance with respect to the creditor; and either:
    (i) A statement of specific reasons for the action taken; or
    (ii) A disclosure of the applicant's right to a statement of 
specific reasons within 30 days, if the statement is requested within 60 
days of the creditor's notification. The disclosure shall include the 
name, address, and telephone number of the person or office from which 
the statement of reasons can be obtained. If the creditor chooses to 
provide the reasons orally, the creditor shall also disclose the 
applicant's right to have them confirmed in writing within 30 days of 
receiving a written request for confirmation from the applicant.
    (3) Notification to business credit applicants. For business credit, 
a creditor shall comply with the requirements of this paragraph in the 
following manner:
    (i) With regard to a business that had gross revenues of $1,000,000 
or less in its preceding fiscal year (other than an extension of trade 
credit, credit incident to a factoring agreement, or other similar types 
of business credit), a creditor shall comply with paragraphs (a) (1) and 
(2) of this section, except that:
    (A) The statement of the action taken may be given orally or in 
writing, when adverse action is taken;

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    (B) Disclosure of an applicant's right to a statement of reasons may 
be given at the time of application, instead of when adverse action is 
taken, provided the disclosure is in a form the applicant may retain and 
contains the information required by paragraph (a)(2)(ii) of this 
section and the ECOA notice specified in paragraph (b)(1) of this 
section;
    (C) For an application made solely by telephone, a creditor 
satisfies the requirements of this paragraph by an oral statement of the 
action taken and of the applicant's right to a statement of reasons for 
adverse action.
    (ii) With regard to a business that had gross revenues in excess of 
$1,000,000 in its preceding fiscal year or an extension of trade credit, 
credit incident to a factoring agreement, or other similar types of 
business credit, a creditor shall:
    (A) Notify the applicant, orally or in writing, within a reasonable 
time of the action taken; and
    (B) Provide a written statement of the reasons for adverse action 
and the ECOA notice specified in paragraph (b)(1) of this section if the 
applicant makes a written request for the reasons within 60 days of 
being notified of the adverse action.
    (b) Form of ECOA notice and statement of specific reasons--(1) ECOA 
notice. To satisfy the disclosure requirements of paragraph (a)(2) of 
this section regarding section 701(a) of the Act, the creditor shall 
provide a notice that is substantially similar to the following:
    The Federal Equal Credit Opportunity Act prohibits creditors from 
discriminating against credit applicants on the basis of race, color, 
religion, national origin, sex, marital status, age (provided the 
applicant has the capacity to enter into a binding contract); because 
all or part of the applicant's income derives from any public assistance 
program; or because the applicant has in good faith exercised any right 
under the Consumer Credit Protection Act. The Federal agency that 
administers compliance with this law concerning this creditor is (name 
and address as specified by the appropriate agency listed in appendix A 
of this regulation).
    (2) Statement of specific reasons. The statement of reasons for 
adverse action required by paragraph (a)(2)(i) of this section must be 
specific and indicate the principal reason(s) for the adverse action. 
Statements that the adverse action was based on the creditor's internal 
standards or policies or that the applicant failed to achieve the 
qualifying score on the creditor's credit scoring system are 
insufficient.
    (c) Incomplete applications--(1) Notice alternatives. Within 30 days 
after receiving application that is incomplete regarding matters that an 
applicant can complete, the creditor shall notify the applicant either:
    (i) Of action taken, in accordance with paragraph (a) of this 
section; or
    (ii) Of the incompleteness, in accordance with paragraph (c)(2) of 
this section.
    (2) Notice of incompleteness. If additional information is needed 
from an applicant, the creditor shall send a written notice to the 
applicant specifying the information needed, designating a reasonable 
period of time for the applicant to provide the information, and 
informing the applicant that failure to provide the information 
requested will result in no further consideration being given to the 
application. The creditor shall have no further obligation under this 
section if the applicant fails to respond within the designated time 
period. If the applicant supplies the requested information within the 
designated time period, the creditor shall take action on the 
application and notify the applicant in accordance with paragraph (a) of 
this section.
    (3) Oral request for information. At its option, a creditor may 
inform the applicant orally of the need for additional information; but 
if the application remains incomplete the creditor shall send a notice 
in accordance with paragraph (c)(1) of this section.
    (d) Oral notifications by small-volume creditors. The requirements 
of this section (including statements of specific reasons) are 
satisified by oral notifications in the case of any creditor that did 
not receive more than 150 applications during the preceding calendar 
year.

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    (e) Withdrawal of approved application. When an applicant submits an 
application and the parties contemplate that the applicant will inquire 
about its status, if the creditor approves the application and the 
applicant has not inquired within 30 days after applying, the creditor 
may treat the application as withdrawn and need not comply with 
paragraph (a)(1) of this section.
    (f) Multiple applicants. When an application involves more than one 
applicant, notification need only be given to one of them, but must be 
given to the primary applicant where one is readily apparent.
    (g) Applications submitted through a third party. When an 
application is made on behalf of an applicant to more than one creditor 
and the applicant expressly accepts or uses credit offered by one of the 
creditors, notification of action taken by any of the other creditors is 
not required. If no credit is offered or if the applicant does not 
expressly accept or use any credit offered, each creditor taking adverse 
action must comply with this section, directly or through a third party. 
A notice given by a third party shall disclose the identify of each 
creditor on whose behalf the notice is given.

[Reg. B, 50 FR 48026, Nov. 20, 1985, as amended at 54 FR 50485, Dec. 7, 
1989]

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    (a) Designation of accounts. A creditor tht furnishes credit 
information shall designate:
    (1) Any new account to reflect the participation of both spouses if 
the applicant's spouse is permitted to use or is contractually liable on 
the account (other than as a guarantor, surety, endorser, or similar 
party); and
    (2) Any existing account to reflect such participation, within 90 
days after receiving a written request to do so from one of the spouses.
    (b) Routine reports to consumer reporting agency. If a creditor 
furnishes credit information to a consumer reporting agency concerning 
an account designated to reflect the participation of both spouses, the 
creditor shall furnish the information in a manner that will enable the 
agency to provide access to the information in the name of each spouse.
    (c) Reporting in response to inquiry. If a creditor furnishes credit 
information in response to an inquiry concerning an account designated 
to reflect the participation of both spouses, the creditor shall furnish 
the information in the name of the spouse about whom the information is 
requested.

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    (a) Inconsistent state laws. Except as otherwise provided in this 
section, this regulation alters, affects, or preempts only those state 
laws that are inconsistent with the act and this regulation and then 
only to the extent of the inconsistency. A state law is not inconsistent 
if it is more protective of an applicant.
    (b) Preempted provisions of state law. (1) A state law is deemed to 
be inconsistent with the requirements of the Act and this regulation and 
less protective of an applicant within the meaning of section 705(f) of 
the Act to the extent that the law:
    (i) Requires or permits a practice or act prohibited by the Act or 
this regulation;
    (ii) Prohibits the individual extension of consumer credit to both 
parties to a marriage if each spouse individually and voluntarily 
applies for such credit;
    (iii) Prohibits inquiries or collection of data required to comply 
with the act or this regulation;
    (iv) Prohibits asking or considering age in an empirically derived, 
demonstrably and statistically sound, credit scoring system to determine 
a pertinent element of creditworthiness, or to favor an elderly 
applicant; or
    (v) Prohibits inquiries necessary to establish or administer as 
special purpose credit program as defined by Sec. 202.8.
    (2) A creditor, state, or other interested party may request the 
Board to determine whether a state law is inconsistent with the 
requirements of the Act and this regulation.
    (c) Laws on finance charges, loan ceilings. If married applicants 
voluntarily

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apply for and obtained individual accounts with the same creditor, the 
accounts shall not be aggregated or otherwise combined for purposes of 
determining permissible finance charges or loan ceilings under any 
federal or state law. Permissible loan ceiling laws shall be construed 
to permit each spouse to become individually liable up to the amount of 
the loan ceilings, less the amount for which the applicant is jointly 
liable.
    (d) State and Federal laws not affected. This section does not alter 
or annul any provision of state property laws, laws relating to the 
disposition of decedents' estates, or Federal or state banking 
regulations directed only toward insuring the solvency of financial 
institutions.
    (e) Exemption for state-regulated transactions--(1) Applications. A 
state may apply to the Board for an exemption from the requirements of 
the Act and this regulation for any class of credit transactions within 
the state. The Board will grant such an exemption if the Board 
determines that:
    (i) The class of credit transactions is subject to state law 
requirements substantially similar to the Act and this regulation or 
that applicants are afforded greater protection under state law; and
    (ii) There is adequate provision for state enforcement.
    (2) Liability and enforcement. (i) No exemption will extend to the 
civil liability provisions of section 706 or the administrative 
enforcement provisions of section 704 of the Act.
    (ii) After an exemption has been granted, the requirements of the 
applicable state law (except for additional requirements not imposed by 
Federal law) will constitute the requirements of the Act and this 
regulation.

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    (a) Retention of prohibited information. A creditor may retain in 
its files information that is prohibited by the Act or this regulation 
in evaluating applications, without violating the Act or this 
regulation, if the information was obtained:
    (1) From any source prior to March 23, 1977;
    (2) From consumer reporting agencies, an applicant, or others 
without the specific request of the creditor; or
    (3) As required to monitor compliance with the Act and this 
regulation or other Federal or state statutes or regulations.
    (b) Preservation of records--(1) Applications. For 25 months (12 
months for business credit) after the date that a creditor notifies an 
applicant of action taken on an application or of incompleteness, the 
creditor shall retain in original form or a copy thereof:
    (i) Any application that it receives, any information required to be 
obtained concerning characteristics of the applicant to monitor 
compliance with the Act and this regulation or other similar law, and 
any other written or recorded information used in evaluating the 
application and not returned to the 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 notation or memorandum 
made by the creditor):
    (A) The notification of action taken; and
    (B) The statement of specific reasons for adverse action; and
    (iii) Any written statement submitted by the applicant alleging a 
violation of the Act or this regulation.
    (2) Existing accounts. For 25 months (12 months for business credit) 
after the date that a creditor notifies an applicant of adverse action 
regarding an existing account, the creditor shall retain as to that 
account, in original form or a copy thereof:
    (i) Any written or recorded information concerning the adverse 
action; and
    (ii) Any written statement submitted by the applicant alleging a 
violation of the act or this regulation.
    (3) Other applications. For 25 months (12 months for business 
credit) after the date that a creditor receives an application for which 
the creditor is not required to comply with the notification 
requirements of Sec. 202.9, the creditor shall retain all written or 
recorded information in its possession concerning the applicant, 
including any notation of action taken.

[[Page 28]]

    (4) Enforcement proceedings and investigations. A creditor shall 
retain the information specified in this section beyond 25 months (12 
months for business credit) if it has actual notice that it is under 
investigation or is subject to an enforcement proceeding for an alleged 
violation of the act or this regulation by the Attorney General of the 
United States or by an enforcement agency charged with monitoring that 
creditor's compliance with the act and this regulation, or if it has 
been served with notice of an action filed pursuant to section 706 of 
the Act and Sec. 202.14 of this regulation. The creditor shall retain 
the information until final disposition of the matter, unless an earlier 
time is allowed by order of the agency or court.
    (5) Special rule for certain business credit applications. With 
regard to a business with gross revenues in excess of $1,000,000 in its 
preceding fiscal year, or an extension of trade credit, credit incident 
to a factoring agreement or other similar types of business credit, the 
creditor shall retain records for at least 60 days after notifying the 
applicant of the action taken. If within that time period the applicant 
requests in writing the reasons for adverse action or that records be 
retained, the creditor shall retain records for 12 months.
    (6) Self-tests. For 25 months after a self-test (as defined in 
Sec. 202.15) has been completed, the creditor shall retain all written 
or recorded information about the self-test. A creditor shall retain 
information beyond 25 months if it has actual notice that it is under 
investigation or is subject to an enforcement proceeding for an alleged 
violation, or if it has been served with notice of a civil action. In 
such cases, the creditor shall retain the information until final 
disposition of the matter, unless an earlier time is allowed by the 
appropriate agency or court order.

[Reg. B, 50 FR 48026, Nov. 20, 1985, as amended at 54 FR 50486, Dec. 7, 
1989; 62 FR 66419, Dec. 18, 1997]

Return to top

    (a) Information to be requested. A creditor that receives an 
application for credit primarily for the purchase or refinancing of a 
dwelling occupied or to be occupied by the applicant as a principal 
residence, where the extension of credit will be secured by the 
dwelling, shall request as part of the application the following 
information regarding the applicant(s):
    (1) Race or national origin, using the categories American Indian or 
Alaskan Native; Asian or Pacific Islander; Black; White; Hispanic; Other 
(Specify);
    (2) Sex;
    (3) Marital status, using the categories married, unmarried, and 
separated; and
    (4) Age.

Dwelling means a residential structure that contains one to four units, 
whether or not that structure is attached to real property. The term 
includes, but is not limited to, an individual condominium or 
cooperative unit, and a mobile or other manufactured home.
    (b) Obtaining of information. Questions regarding race or national 
origin, sex, marital status, and age may be listed, at the creditor's 
option, on the application form or on a separate form that refers to the 
application. The applicant(s) shall be asked but not required to supply 
the requested information. If the applicant(s) chooses not to provide 
the information or any part of it, that fact shall be noted on the form. 
The creditor shall then also note on the form, to the extent possible, 
the race or national origin and sex of the applicant(s) on the basis of 
visual observation or surname.
    (c) Disclosure to applicant(s). The creditor shall inform the 
applicant(s) that the information regarding race or national origin, 
sex, marital status, and age is being requested by the Federal 
government for the purpose of monitoring compliance with Federal 
statutes that prohibit creditors from discriminating against appliants 
on those bases. The creditor shall also inform the applicant(s) that if 
the applicant(s) chooses note to provide the information, the creditor 
is required to note the race or national origin and sex on the basis of 
visual observation or surname.
    (d) Substitute monitoring program. A monitoring program required by 
an agency charged with administrative enforcement under section 704 of 
the

[[Page 29]]

Act may be substituted for the requirements contained in paragraphs (a), 
(b), and (c).

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    (a) Administrative enforcement. (1) As set forth more fully in 
section 704 of the Act, administrative enforcement of the Act and this 
regulation regarding certain creditors is assigned to the Comptroller of 
the Currency, Board of Governors of the Federal Reserve System, Board of 
Directors of the Federal Deposit Insurance Corporation, Office of Thrift 
Supervision, National Credit Union Administration, Interstate Commerce 
Commission, Secretary of Agriculture, Farm Credit Administration, 
Securities and Exchange Commission, Small Business Administration, and 
Secretary of Transportation.
    (2) Except to the extent that administrative enforcement is 
specifically assigned to other authorities, compliance with the 
requirements imposed under the act and this regulation is enforced by 
the Federal Trade Commission.
    (b) Penalties and liabilities. (1) Sections 706 (a) and (b) and 
702(g) of the Act provide that any creditor that fails to comply with a 
requirement imposed by the Act or this regulation is subject to civil 
liability for actual and punitive damages in individual or class 
actions. Pursuant to sections 704 (b), (c), and (d) and 702(g) of the 
Act, violations of the Act or regulations also constitute violations of 
other Federal laws. Liability for punitive damages is restricted to 
nongovernmental entities and is limited to $10,000 in individual actions 
and the lesser of $500,000 or 1 percent of the creditor's net worth in 
class actions. Section 706(c) provides for equitable and declaratory 
relief and section 706(d) authorizes the awarding of costs and 
reasonable attorney's fees to an aggrieved applicant in a successful 
action.
    (2) As provided in section 706(f), a civil action under the Act or 
this regulation may be brought in the appropriate United States district 
court without regard to the amount in controversy or in any other court 
of competent jurisdiction within two years after the date of the 
occurrence of the violation, or within one year after the commencement 
of an administrative enforcement proceeding or of a civil action brought 
by the Attorney General of the United States within two years after the 
alleged violation.
    (3) If an agency responsible for administrative enforcement is 
unable to obtain compliance with the act or this part, it may refer the 
matter to the Attorney General of the United States. In addition, if the 
Board, the Comptroller of the Currency, the Federal Deposit Insurance 
Corporation, the Office of Thrift Supervision, or the National Credit 
Union Administration has reason to believe that one or more creditors 
engaged in a pattern or practice of discouraging or denying applications 
in violation of the act or this part, the agency shall refer the matter 
to the Attorney General. Furthermore, the agency may refer a matter to 
the Attorney General if the agency has reason to believe that one or 
more creditors violated section 701(a) of the act.
    (4) On referral, or whenever the Attorney General has reason to 
believe that one or more creditors engaged in a pattern or practice in 
violation of the act or this regulation, the Attorney General may bring 
a civil action for such relief as may be appropriate, including actual 
and punitive damages and injunctive relief.
    (5) If the Board, the Comptroller of the Currency, the Federal 
Deposit Insurance Corporation, the Office of Thrift Supervision, or the 
National Credit Union Administration has reason to believe (as a result 
of a consumer complaint, conducting a consumer compliance examination, 
or otherwise) that a violation of the act or this part has occurred 
which is also a violation of the Fair Housing Act, and the matter is not 
referred to the Attorney General, the agency shall notify:
    (i) The Secretary of Housing and Urban Development; and
    (ii) The applicant that the Secretary of Housing and Urban 
Development has been notified and that remedies for the violation may be 
available under the Fair Housing Act.
    (c) Failure of compliance. A creditor's failure to comply with 
Secs. 202.6(b)(6), 202.9, 202.10, 202.12 or 202.13 is not a violation if 
it results from an inadvertent error. On discovering an error under

[[Page 30]]

Sec. Sec. 202.9 and 202.10, the creditor shall correct it as soon as 
possible. If a creditor inadvertently obtains the monitoring information 
regarding the race or national origin and sex of the applicant in a 
dwelling-related transaction not overed by Sec. 202.13, the creditor may 
act on and retain the application without violating the regulation.

[Reg. B, 50 FR 48026, Nov. 20, 1985, as amended at 54 FR 53539, Dec. 29, 
1989; 58 FR 65662, Dec. 16, 1993]

Return to top

    (a) General rules--(1) Voluntary self-testing and correction. The 
report or results of the self-test that a creditor voluntarily conducts 
(or authorizes) are privileged as provided in this section. Data 
collection required by law or by any governmental authority is not a 
voluntary self-test.
    (2) Corrective action required. The privilege in this section 
applies only if the creditor has taken or is taking appropriate 
corrective action.
    (3) Other privileges. The privilege created by this section does not 
preclude the assertion of any other privilege that may also apply.
    (b) Self-test defined--(1) Definition. A self-test is any program, 
practice, or study that:
    (i) Is designed and used specifically to determine the extent or 
effectiveness of a creditor's compliance with the act or this 
regulation; and
    (ii) Creates data or factual information that is not available and 
cannot be derived from loan or application files or other records 
related to credit transactions.
    (2) Types of information privileged. The privilege under this 
section applies to the report or results of the self-test, data or 
factual information created by the self-test, and any analysis, 
opinions, and conclusions pertaining to the self-test report or results. 
The privilege covers workpapers or draft documents as well as final 
documents.
    (3) Types of information not privileged. The privilege under this 
section does not apply to:
    (i) Information about whether a creditor conducted a self-test, the 
methodology used or the scope of the self-test, the time period covered 
by the self-test, or the dates it was conducted; or
    (ii) Loan and application files or other business records related to 
credit transactions, and information derived from such files and 
records, even if it has been aggregated, summarized, or reorganized to 
facilitate analysis.
    (c) Appropriate corrective action--(1) General requirement. For the 
privilege in this section to apply, appropriate corrective action is 
required when the self-test shows that it is more likely than not that a 
violation occurred, even though no violation has been formally 
adjudicated.
    (2) Determining the scope of appropriate corrective action. A 
creditor must take corrective action that is reasonably likely to remedy 
the cause and effect of a likely violation by:
    (i) Identifying the policies or practices that are the likely cause 
of the violation; and
    (ii) Assessing the extent and scope of any violation.
    (3) Types of relief. Appropriate corrective action may include both 
prospective and remedial relief, except that to establish a privilege 
under this section:
    (i) A creditor is not required to provide remedial relief to a 
tester used in a self-test;
    (ii) A creditor is only required to provide remedial relief to an 
applicant identified by the self-test as one whose rights were more 
likely than not violated; and
    (iii) A creditor is not required to provide remedial relief to a 
particular applicant if the statute of limitations applicable to the 
violation expired before the creditor obtained the results of the self-
test or the applicant is otherwise ineligible for such relief.
    (4) No admission of violation. Taking corrective action is not an 
admission that a violation occurred.
    (d)(1) Scope of privilege. The report or results of a privileged 
self-test may not be obtained or used:
    (i) By a government agency in any examination or investigation 
relating to compliance with the act or this regulation; or
    (ii) By a government agency or an applicant (including a prospective 
applicant who alleges a violation of

[[Page 31]]

Sec. 202.5(a)) in any proceeding or civil action in which a violation of 
the act or this regulation is alleged.
    (2) Loss of privilege. The report or results of a self-test are not 
privileged under paragraph (d)(1) of this section if the creditor or a 
person with lawful access to the report or results):
    (i) Voluntarily discloses any part of the report or results, or any 
other information privileged under this section, to an applicant or 
government agency or to the public;
    (ii) Discloses any part of the report or results, or any other 
information privileged under this section, as a defense to charges that 
the creditor has violated the act or regulation; or
    (iii) Fails or is unable to produce written or recorded information 
about the self-test that is required to be retained under 
Sec. 202.12(b)(6) when the information is needed to determine whether 
the privilege applies. This paragraph does not limit any other penalty 
or remedy that may be available for a violation of Sec. 202.12.
    (3) Limited use of privileged information. Notwithstanding paragraph 
(d)(1) of this section, the self-test report or results and any other 
information privileged under this section may be obtained and used by an 
applicant or government agency solely to determine a penalty or remedy 
after a violation of the act or this regulation has been adjudicated or 
admitted. Disclosures for this limited purpose may be used only for the 
particular proceeding in which the adjudication or admission was made. 
Information disclosed under this paragraph (d)(3) remains privileged 
under paragraph (d)(1) of this section.

[62 FR 66419, Dec. 18, 1997]

     Appendix A to Part 202--Federal Enforcement Agencies
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    The following list indicates the federal agencies that enforce 
Regulation B for particular classes of creditors. Any questions 
concerning a particular creditor should be directed to its enforcement 
agency. Terms that are not defined in the Federal Deposit Insurance Act 
(12 U.S.C. 1813(s)) shall have the meaning given to them in the 
International Banking Act of 1978 (12 U.S.C. 3101).

  National Banks, and Federal Branches and Federal Agencies of Foreign 
                                  Banks

    Office of the Comptroller of the Currency, Customer Assistance Unit, 
1301 McKinney Avenue, Suite 3710, Houston, Texas 77010.

 State Member Banks, Branches and Agencies of Foreign Banks (other than 
   federal branches, federal agencies, and insured state branches of 
  foreign banks), Commercial Lending Companies Owned or Controlled by 
 Foreign Banks, and Organizations Operating under Section 25 or 25A of 
                         the Federal Reserve Act

    Federal Reserve Bank serving the district in which the institution 
is located.

   Nonmember Insured Banks and Insured State Branches of Foreign Banks

    Federal Deposit Insurance Corporation Regional Director for the 
region in which the institution is located.

  Savings institutions insured under the Savings Association Insurance 
Fund of the FDIC and federally chartered saving banks insured under the 
   Bank Insurance Fund of the FDIC (but not including state-chartered 
          savings banks insured under the Bank Insurance Fund).

    Office of Thrift Supervision Regional Director for the region in 
which the institution is located.

                          Federal Credit Unions

    Regional office of the National Credit Union Administration serving 
the area in which the federal credit union is located.

                              Air Carriers

    Assistant General Counsel for Aviation Enforcement and Proceedings, 
Department of Transportation, 400 Seventh Street, SW, Washington, DC 
20590.

           Creditors Subject to Interstate Commerce Commission

    Office of Proceedings, Interstate Commerce Commission, Washington, 
DC 20523.

             Creditors Subject to Packers and Stockyards Act

    Nearest Packers and Stockyards Administration area supervisor.

                   Small Business Investment Companies

    U.S. Small Business Administration, 1441 L Street, NW., Washington, 
DC 20416.

                           Brokers and Dealers

    Securities and Exchange Commission, Washington, DC 20549.

[[Page 32]]

Federal Land Banks, Federal Land Bank Associations, Federal Intermediate 
            Credit Banks, and Production Credit Associations

    Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 
22102-5090.

 Retailers, Finance Companies, and All Other Creditors Not Listed Above

    FTC Regional Office for region in which the creditor operates or 
Federal Trade Commission, Equal Credit Opportunity, Washington, DC 
20580.

[Reg. B, 50 FR 48026, Nov. 20, 1985, as amended at 54 FR 53539, Dec. 29, 
1989; 56 FR 51322, Oct. 11, 1991; 57 FR 20399, May 13, 1992; 63 FR 
16394, Apr. 3, 1998]

             Appendix B to Part 202--Model Application Forms
Return to top
    This appendix contains five model credit application forms, each 
designated for use in a particular type of consumer credit transaction 
as indicated by the bracketed caption on each form. The first sample 
form is intended for use in open-end, unsecured transactions; the second 
for closed-end, secured transactions; the third for closed-end 
transactions, whether unsecured or secured; the fourth in transactions 
involving community property or occurring in community property states; 
and the fifth in residential mortgage transactions. The appendix also 
contains a model disclosure for use in complying with Sec. 202.13 for 
certain dwelling-related loans. All forms contained in this appendix are 
models; their use by creditors is optional.
    The use or modification of these forms is governed by the following 
instructions. A creditor may change the forms: by asking for additional 
information not prohibited by Sec. 202.5; by deleting any information 
request; or by rearranging the format without modifying the substance of 
the inquiries. In any of these three instances, however, the appropriate 
notices regarding the optional nature of courtesy titles, the option to 
disclose alimony, child support, or separate maintenance, and the 
limitation concerning marital status inquiries must be included in the 
appropriate places if the items to which they relate appear on the 
creditor's form.
    If a creditor uses an appropriate Appendix B model form, or modifies 
a form in accordance with the above instructions, that creditor shall be 
deemed to be acting in compliance with the provisions of paragraphs (c) 
and (d) of Sec. 202.5 of this regulation.

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            Appendix C to Part 202--Sample Notification Forms
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    This appendix contains nine sample notification forms. Forms C-1 
through C-4 are intended for use in notifying an applicant that adverse 
action has been taken on an application or account under 
Sec. 202.9(a)(1) and (2)(i) of this regulation. Form C-5 is a notice of 
disclosure of the right to request specific reasons for adverse action 
under Sec. 202.9(a)(1) and (2)(ii). For C-6 is designed for use in 
notifying an applicant, under Sec. 202.9(c)(2), that an application is 
incomplete. Forms C-7 and C-8 are intended for use in connection with 
applications for business credit under Sec. 202.9(a)(3). Form C-9 is 
designed for use in notifying an applicant of the right to receive a 
copy of an appraisal under Sec. 202.5a.
    Form C-1 contains the Fair Credit Reporting Act disclosure as 
required by sections 615(a) and (b) of that act. Forms C-2 through C-5 
contain only the section 615(a) disclosure (that a creditor obtained 
information from a consumer reporting agency that played a part in the 
credit decision). A creditor must provide the 615(a) disclosure when 
adverse action is taken against a consumer based on information from a 
consumer reporting agency. A creditor must provide the section 615(b) 
disclosure when adverse action is taken based on information from an 
outside source other than a consumer reporting agency. In addition, a 
creditor must provide the 615(b) disclosure if the creditor obtained 
information from an affiliate other than information in a consumer 
report or other than information concerning the affiliate's own 
transactions or experiences with the consumer. Creditors may comply with 
the disclosure requirements for adverse action based on information in a 
consumer report obtained from an affiliate by providing either the 
615(a) or 615(b) disclosure.
    The sample forms are illustrative and may not be appropriate for all 
creditors. They were designed to include some of the factors that 
creditors most commonly consider. If a creditor chooses to use the 
checklist of reasons provided in one of the sample forms in this 
appendix and if reasons commonly used by the creditor are not provided 
on the form, the creditor should modify the checklist by substituting or 
adding other reasons. For example, if ``inadequate down payment'' or 
``no deposit relationship with us'' are common reasons for taking 
adverse action on an application, the creditor ought to add or 
substitute such reasons for those presently contained on the sample 
forms.
    If the reasons listed on the forms are not the factors actually 
used, a creditor will not satisfy the notice requirement by simply 
checking the closest identifiable factor listed. For example, some 
creditors consider only references from banks or other depository 
institutions and disregard finance company references altogether; their 
statement of reasons should disclose ``insufficient bank references,'' 
not ``insufficient credit references.'' Similarly, a creditor that 
considers bank references and other credit references as distinct 
factors should treat the two factors separately and disclose them as 
appropriate. The creditor should either add such other factors to the 
form or check ``other'' and include the appropriate explanation. The 
creditor need not, however, describe how or why a factor adversely 
affected the application. For example, the notice may say ``length of 
residence'' rather than ``too short a period of residence.''
    A creditor may design its own notification forms or use all or a 
portion of the forms contained in this appendix. Proper use of Forms C-1 
through C-4 will satisfy the requirements of Sec. 202.9(a)(2)(i). Proper 
use of Forms C-5 and C-6 constitutes full compliance with 
Sec. Sec. 202.9(a)(2)(ii) and 202.9(c)(2), respectively. Proper use of 
Forms C-7 and C-8 will satisfy the requirements of Sec. 202.9(a)(2) (i) 
and (ii), respectively, for applications for business credit. Proper use 
of Form C-9 will satisfy the requirements of Sec. 202.5a of this part.

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    FORM C-7--SAMPLE NOTICE OF ACTION TAKEN AND STATEMENT OF REASONS 
                            (BUSINESS CREDIT)

Creditor's name

Creditor's address

Date

    Dear Applicant: Thank you for applying to us for credit. We have 
given your request careful consideration, and regret that we are unable 
to extend credit to you at this time for the following reasons:

(Insert appropriate reason, such as Value or type of collateral not 
sufficient Lack of established earnings record Slow or past due in trade 
or loan payments)

      Sincerely,

    Notice: The federal Equal Credit Opportunity Act prohibits creditors 
from discriminating against credit applicants on the basis of race, 
color, religion, national origin, sex, marital status, age (provided the 
applicant has the capacity to enter into a binding contract); because 
all or part of the applicant's income derives from any public assistance 
program; or because the applicant has in good faith exercised any right 
under the Consumer Credit Protection Act. The federal agency that 
administers compliance with this law concerning this creditor is [name 
and address as specified by the appropriate agency listed in appendix 
A].

  FORM C-8--SAMPLE DISCLOSURE OF RIGHT TO REQUEST SPECIFIC REASONS FOR 
      CREDIT DENIAL GIVEN AT TIME OF APPLICATION (BUSINESS CREDIT)

Creditor's name

Creditor's address

    If your application for business credit is denied, you have the 
right to a written statement of the specific reasons for the denial. To 
obtain the statement, please contact [name, address and telephone number 
of the person or office from which the statement of reasons can be 
obtained] within 60 days from the date you are notified of our decision. 
We will send you a written statement of reasons for the denial within 30 
days of receiving your request for the statement.

    Notice: The federal Equal Credit Opportunity Act prohibits creditors 
from discriminating against credit applicants on the basis of race, 
color, religion, national origin, sex, marital status, age (provided the 
applicant has the capacity to enter into a binding contract); because 
all or part of the applicant's

[[Page 51]]

income derives from any public assistance program; or because the 
applicant has in good faith exercised any right under the Consumer 
Credit Protection Act. The federal agency that administers compliance 
with this law concerning this creditor is [name and address as specified 
by the appropriate agency listed in appendix A].

 Form C-9--Sample Disclosure of Right to Receive a Copy of an Appraisal

    You have the right to a copy of the appraisal report used in 
connection with your application for credit. If you wish a copy, please 
write to us at the mailing address we have provided. We must hear from 
you no later than 90 days after we notify you about the action taken on 
your credit application or you withdraw your application.
    [In your letter, give us the following information:]

[Reg. B, 50 FR 48026, Nov. 20, 1985, as amended at 54 FR 50486, Dec. 7, 
1989; 58 FR 65662, Dec. 16, 1993; 63 FR 16394, Apr. 3, 1998]

        Appendix D to Part 202--Issuance of Staff Interpretations
Return to top
                     Official Staff Interpretations

    Officials in the Board's Division of Consumer and Community Affairs 
are authorized to issue official staff interpretations of this 
regulation. These interpretations provide the protection afforded under 
section 706(e) of the Act. Except in unusual circumstances, such 
interpretations will not be issued separately but will be incorporated 
in an official commentary to the regulation, which will be amended 
periodically.

         Requests for Issuance of Official Staff Interpretations

    A request for an official staff interpretation should be in writing 
and addressed to the Director, Division of Consumer and Community 
Affairs, Board of Governors of the Federal Reserve System, Washington, 
DC 20551. The request should contain a complete statement of all 
relevant facts concerning the issue, including copies of all pertinent 
documents.

                        Scope of Interpretations

    No staff interpretations will be issued approving creditor's forms 
or statements. This restriction does not apply to forms or statements 
whose use is required or sanctioned by a government agency.

        Supplement I to Part 202--Official Staff Interpretations

                             [Reg. B; ECO-1]

    Following is an official staff interpretation of Regulation B issued 
under authority delegated by the Federal Reserve Board to officials in 
the Division of Consumer and Community Affairs. References are to 
sections of the regulation or the Equal Credit Opportunity Act (15 
U.S.C. 1601 et seq.).

                              Introduction

    1. Official status. Section 706(e) of the Equal Credit Opportunity 
Act protects a creditor from civil liability for any act done or omitted 
in good faith in conformity with an interpretation issued by a duly 
authorized official of the Federal Reserve Board. This commentary is the 
means by which the Division of Consumer and Community Affairs of the 
Federal Reserve Board issues official staff interpretations of 
Regulation B. Good-faith compliance with this commentary affords a 
creditor protection under section 706(e) of the Act.
    2. Issuance of interpretations. Under appendix D to the regulation, 
any person may request an official staff interpretation. Interpretations 
will be issued at the discretion of designated officials and 
incorporated in this commentary following publication for comment in the 
Federal Register. Except in unusual circumstances, official staff 
interpretations will be issued only by means of this commentary.
    3. Status of previous interpretations. Interpretations of Regulation 
B previously issued by the Federal Reserve Board and its staff have been 
incorporated into this commentary as appropriate. All other previous 
Board and staff interpretations, official and unofficial, are superseded 
by this commentary.
    4. Footnotes. Footnotes in the regulation have the same legal effect 
as the text of the regulation, whether they are explanatory or 
illustrative in nature.
    5. Comment designations. The comments are designated with as much 
specificity as possible according to the particular regulatory provision 
addressed. Each comment in the commentary is identified by a number and 
the regulatory section or paragraph that it interprets. For example, 
comments to Sec. 202.2(c) are further divided by subparagraph, such as 
comment 2(c)(1)(ii)-1 and comment 2(c)(2)(ii)-1.

              Section 202.1--Authority, Scope, and Purpose

    1(a) Authority and scope.
    1. Scope. The Equal Credit Opportunity Act and Regulation B apply to 
all credit--commercial as well as personal--without regard to the nature 
or type of the credit or the creditor. If a transaction provides for the 
deferral of the payment of a debt, it is credit covered by Regulation B 
even though it may not be a credit transaction covered by Regulation Z 
(Truth in Lending). Further, the definition of creditor is not 
restricted to the party or person to whom the obligation is

[[Page 52]]

initially payable, as is the case under Regulation Z. Moreover, the Act 
and regulation apply to all methods of credit evaluation, whether 
performed judgmentally or by use of a credit scoring system.
    2. Foreign applicability. Regulation B generally does not apply to 
lending activities that occur outside the United States. The regulation 
does apply to lending activities that take place within the United 
States (as well as the Commonwealth of Puerto Rico and any territory or 
possession of the United States), whether or not the applicant is a 
citizen.
    3. Board. The term Board, as used in this regulation, means the 
Board of Governors of the Federal Reserve System.

                       Section 202.2  Definitions

    2(c) Adverse action.

                          Paragraph 2(c)(1)(i)

    1. Application for credit. A refusal to refinance or extend the term 
of a business or other loan is adverse action if the applicant applied 
in accordance with the creditor's procedures.

                          Paragraph 2(c)(1)(ii)

    1. Move from service area. If a credit card issuer terminates the 
open-end account of a customer because the customer has moved out of the 
card issuer's service area, the termination is adverse action for 
purposes of the regulation unless termination on this ground was 
explicitly provided for in the credit agreement between the parties. In 
cases were termination is adverse action, notification is required under 
Sec. 202.9.
    2. Termination based on credit limit. If a creditor terminates 
credit accounts that have low credit limits (for example, under $400) 
but keeps open accounts with higher credit limits, the termination is 
adverse action and notification is required under Sec. 202.9.

                          Paragraph 2(c)(2)(ii)

    1. Default--exercise of due-on-sale clause. If a mortgagor sells or 
transfers mortgaged property without the consent of the mortgagee, and 
the mortgagee exercises its contractual right to accelerate the mortgage 
loan, the mortgagee may treat the mortgagor as being in default. An 
adverse action notice need not be given to the mortgagor or the 
transferee. (See comment 2(e)-1 for treatment of a purchaser who 
requests to assume the loan.)
    2. Current delinquency or default. The term adverse action does not 
include a creditor's termination of an account when the accountholder is 
currently in default or delinquent on that account. Notification in 
accordance with Sec. 202.9 of the regulation generally is required, 
however, if the creditor's action is based on a past delinquency or 
default on the account.

                        Paragraph (2)(c)(2)(iii)

    1. Point-of-sale transactions. Denial of credit at point of sale is 
not adverse action except under those circumstances specified in the 
regulation. For example, denial, at point of sale is not adverse action 
in the following situations:
     A credit cardholder presents an expired card or a card that 
has been reported to the card issuer as lost or stolen.
     The amount of a transaction exceeds a cash advance or 
credit limit.
     The circumstances (such as excessive use of a credit card 
in a short period of time) suggests that fraud is involved.
     The authorization facilities are not functioning.
     Billing statements have been returned to the creditor for 
lack of a forwarding address.
    2. Application for increase in available credit. A refusal or 
failure to authorize an account transaction at the point of sale or loan 
is not adverse action, except when the refusal is a denial of an 
application, submitted in accordance with the creditor's procedures, for 
an increase in the amount of credit.

                          Paragraph 2(c)(2)(v)

    1. Terms of credit versus type of credit offered. When an applicant 
applies for credit and the creditor does not offer the credit terms 
requested by the applicant (for example, the interest rate, length of 
maturity, collateral, or amount of downpayment), a denial of the 
application for that reason is adverse action (unless the creditor makes 
a counteroffer that is accepted by the applicant) and the applicant is 
entitled to notification under Sec. 202.9.
    2(e) Applicant.
    1. Request to assume loan. If a mortgagor sells or transfers the 
mortgaged property and the buyer makes an application to the creditor to 
assume the mortgage loan, the mortgagee must treat the buyer as an 
applicant unless its policy is not to permit assumptions.
    2(f) Application.
    1. General. A creditor has the latitude under the regulation to 
establish its own application process and to decide the type and amount 
of information it will require from credit applicants.
    2. Procedures established. The term refers to the actual practices 
followed by a creditor for making credit decisions as well as its stated 
application procedures. For example, if a creditor's stated policy is to 
require all applications to be in writing on the creditor's application 
form, but the creditor also makes credit decision based on oral 
requests, the creditor's establish procedures are to accept both oral 
and written applications.
    3. When an inquiry becomes an application. A creditor is encouraged 
to provide consumers with information about loan terms. However,

[[Page 53]]

if in giving information to the consumer the creditor also evaluates 
information about the appliant, decides to decline the request, and 
communicates this to the applicant, the creditor has treated the inquiry 
as an application and must then comply with the notification 
requirements under Sec. 202.9. Whether the inquiry becomes an 
application depends on how the creditor responds to the applicant, not 
on what the appliant says or asks.
    4. Examples of inquiries that are not applications. The following 
examples illustrate situations in which only an inquiry has taken place:
     When a consumer calls to asks about loan terms and an 
employee explains the creditor's basic loan terms, such as interest 
rates, loan to value ration, and debt to income ratio.
     When a consumer calls to ask about interest rates for car 
loans, and, in order to quote the appropriate rate, the loan officer 
asks for the make and sale price of the car and amount of the down-
payment, then given the consumer the rate.
     When a consumer asks about terms for a loan to purchase 
home and tells the loan officer her income and intended down-payment, 
but the loan officer only explains the creditor's loan to value ratio 
policy and other basic lending policies, without telling the consumer 
whether she qualifies for the loan.
     When a consumer calls to ask about terms for a loan to 
purchase vacant land and states his income, the sale price of the 
property to be financed, and asks whether he qualifies for a loan, and 
the employee responds by describing the general lending policies, 
explaining that he would need to look at all of the applicant's 
qualifications before making a decision, and offering to send an 
application form to the consumer.
    5. Completed Application--diligence requirement. The regulation 
defines a completed application in terms that give a creditor the 
latitude to establish its own information requirements. Nevertheless, 
the creditor must act with reasonable diligence to collect information 
needed to complete the application. For example, the creditor should 
request information from third parties, such as a credit report, 
promptly after receiving the application. If additional information is 
needed from the applicant, such as an address or telephone number needed 
to verify employment, the creditor should contact the applicant 
promptly. (But see comment 9(a)(1)-3, which discusses the creditors's 
option to deny an application on the basis of incompleteness.)
    2(g) Business credit.
    1. Definition. The test for deciding whether a transaction qualifies 
as business credit is one of primary purpose. For example, an open-end 
credit account used for both personal and business purposes is not 
business credit unless the primary purpose of the account is business-
related. A creditor may rely on an applicant's statement of the purpose 
for the credit requested.
    2(j) Credit.
    1. General. Regulation B covers a wider range of credit transactions 
than Regulation Z (Truth in Lending). For purposes of Regulation B a 
transaction is credit if there is a right to defer payment of a debt--
regardless of whether the credit is for personal or commercial purposes, 
the number of installments required for repayment, or whether the 
transaction is subject to a finance charge.
    2(1) Creditor.
    1. Assignees. The term creditor includes all persons participating 
in the credit decision. This may include an assignee or a potential 
purchaser of the obligation who influences the credit decision by 
indicating whether or not it will purchase the obligation if the 
transaction is consummated.
    2. Referrals to creditors. For certain purposes, the term creditor 
includes persons such as real estate brokers who do not participate in 
credit decisions but who regularly refer applicants to creditors or who 
select or offer to select creditors to whom credit requests can be made. 
These persons must comply with Sec. 202.4, the general rule prohibiting 
discrimination, and with Sec. 202.5(a), on discouraging applications.
    2(p) Empirically derived and other credit scoring systems.
    1. Purpose of definition. The definition under Sec. 202.2(p)(1) 
through (iv) sets the criteria that a credit system must meet in order 
for the system to use age as a predictive factor. Credit systems that do 
not meet these criteria are judgmental systems and may consider age only 
for the purpose of determining a ``pertinent element of 
creditworthiness.'' (Both types of systems may favor an elderly 
applicant. See Sec. 202.6(b)(2).)
    2. Periodic revalidation. The regulation does not specify how often 
credit scoring systems must be revalidated. To meet the requirements for 
statistical soundness, the credit scoring system must be revalidated 
frequently enough to assure that it continues to meet recognized 
professional statistical standards. To ensure that predictive ability is 
being maintained, creditors must periodically review the performance of 
the system. This could be done, for example, by analyzing the loan 
portfolio to determine the delinquency rate for each score interval, or 
by analyzing population stability over time to detect deviations of 
recent applications from the applicant population used to validate the 
system. If this analysis indicates that the system no longer predicts 
risk with statistical soundness, the system must be adjusted as 
necessary to reestablish its predictive ability. A creditor is 
responsible for ensuring its system is validated and revalidated based

[[Page 54]]

on the creditor's own data when it becomes available.
    3. Pooled data scoring systems. A scoring system or the data from 
which to develop such a system may be obtained from either a single 
credit grantor or multiple credit grantors. The resulting system will 
qualify as an empirically derived, demonstrably and statistically sound, 
credit scoring system provided the criteria set forth in paragraph 
(p)(1) (i) through (iv) of this section are met.
    4. Effects test and disparate treatment. An empirically derived, 
demonstrably and statistically sound, credit scoring system may include 
age as a predictive factor (provided that the age of an elderly 
applicant is not assigned a negative factor or value). Besides age, no 
other prohibited basis may be used as a variable. Generally, credit 
scoring systems treat all applicants objectively and thus avoid problems 
of disparate treatment. In cases where a credit scoring system is used 
in conjunction with individual discretion, disparate treatment could 
conceivably occur in the evaluation process. In addition, neutral 
factors used in credit scoring systems could nonetheless be subject to 
challenge under the effects test. (See comment 6(a)-2 for a discussion 
of the effects test).
    2(w) Open-end credit.
    1. Open-end real estate mortgages. The term open-end credit does not 
include negotiated advances under an open-end real estate mortgage or a 
letter of credit.
    2(z) Prohibited basis.
    1. Persons associated with applicant. Prohibited basis as used in 
this regulation refers not only to certain characteristics--the race, 
color, religion, national origin, sex, marital status, or age--of an 
applicant (or officers of an applicant in the case of a corporation) but 
also to the characteristics of individuals with whom an applicant is 
affiliated or with whom the applicant associates. This means, for 
example, that under the general rule stated in Sec. 202.4, a creditor 
may not discriminate against an applicant because of that person's 
personal or business dealings with members of a certain religion, 
because of the national origin of any persons associated with the 
extension of credit (such as the tenants in the apartment complex being 
financed), or because of the race of other residents in the neighborhood 
where the property offered as collateral is located.
    2. National origin. A creditor may not refuse to grant credit 
because an applicant comes from a particular country but may take the 
applicant's immigration status into account. A creditor may also take 
into account any applicable law, regulation, or executive order 
restricting dealings with citizens (or the government) of a particular 
country or imposing limitations regarding credit extended for their use.
    3. Public assistance program. Any Federal, state, or local 
governmental assistance program that provides a continuing, periodic 
income supplement, whether premised on entitlement or need, is public 
assistance for purposes of the regulation. The term includes (but is not 
limited to) Aid to Families with Dependent Children, food stamps, rent 
and mortgage supplement or assistance programs, Social Security and 
Supplemental Security Income, and unemployment compensation. Only 
physicians, hospitals, and others to whom the benefits are payable need 
consider Medicare and Medicaid as public assistance.

  Section 202.3--Limited Exceptions for Certain Classes of Transactions

    1. Scope. This section relieves burdens with regard to certain types 
of credit for which full application of the procedural requirements of 
the regulation is not needed. All classes of transactions remain subject 
to the general rule given in Sec. 202.4, barring discrimination on a 
prohibited basis, and to any other provision not specifically excepted.
    3(a) Public utilities credit.
    1. Definition. This definition applies only to credit for the 
purchase of a utility service, such as electricity, gas, or telephone 
service. Credit provided or offered by a public utility for some other 
purpose--such as for financing the purchase of a gas dryer, telephone 
equipment, or other durable goods, or for insulation or other home 
improvements--is not excepted.
    2. Security deposits. A utility company is a creditor when it 
supplies utility service and bills the user after the service has been 
provided. Thus, any credit term (such as a requirement for a security 
deposit) is subject to the regulation.
    3. Telephone companies. A telephone company's credit transactions 
qualify for the exceptions provided in Sec. 202.3(a)(2) only if the 
company is regulated by a government unit or files the charges for 
service, delayed payment, or any discount for prompt payment with a 
government unit.
    3(c) Incidental credit.
    1. Examples. If a service provider (such as a hospital, doctor, 
lawyer or retailer) allows the client or customer to defer the payment 
of a bill, this deferral of debt is credit for purposes of the 
regulation, even though there is no finance charge and no agreement for 
payment in installments. Because of the exceptions provided by this 
section, however, these particular credit extensions are excepted from 
compliance with certain procedural requirements as specified in the 
regulation.
    3(d) Government credit.
    1. Credit to governments. The exception relates to credit extended 
to (not by) governmental entities. For example, credit extended to a 
local government by a creditor in the private sector is covered by this 
exception, but credit extended to consumers by a

[[Page 55]]

federal or state housing agency does not qualify for special treatment 
under this category.

         Section 202.4--General Rule Prohibiting Discrimination

    1. Scope of section. The general rule stated in Sec. 202.4 covers 
all dealings, without exception, between an applicant and a creditor, 
whether or not addressed by other provisions of the regulation. Other 
sections of the regulation identify specific practices that the Board 
has decided are impermissible because they could result in credit 
discrimination on a basis prohibited by the act. The general rule 
covers, for example, application procedures, criteria used to evaluate 
creditworthiness, administration of accounts, and treatment of 
delinquent or slow accounts. Thus, whether or not specifically 
prohibited elsewhere in the regulation, a credit practice that treats 
applicants differently on a prohibited basis violates the law because it 
violates the general rule. Disparate treatment on a prohibited basis is 
illegal whether or not it results from a conscious intent to 
discriminate. Disparate treatment would be found, for example, where a 
creditor requires a minority applicant to provide greater documentation 
to obtain a loan than a similarly situated nonminority applicant. 
Disparate treatment also would be found where a creditor waives or 
relaxes credit standards for a nonminority applicant but not for a 
similarly situated minority applicant. Treating applicants differently 
on a prohibited basis is unlawful if the creditor lacks a legitimate 
nondiscriminatory reason for its action, or if the asserted reason is 
found to be a pretext for discrimination.

         Section 202.5--Rules Concerning Taking of Applications

    5(a) Discouraging applications.
    1. Potential applicants. Generally, the regulation's protections 
apply only to persons who have requested or received an extension of 
credit. In keeping with the purpose of the act--to promote the 
availability of credit on a nondiscriminatory basis Sec. 202.5(a) covers 
acts or practices directed at potential applicants. Practices prohibited 
by this section include:
     A statement that the applicant should not bother to apply, 
after the applicant states that he is retired.
     Use of words, symbols, models or other forms of 
communication in advertising that express, imply or suggest a 
discriminatory preference or a policy of exclusion in violation of the 
act.
     Use of interview scripts that discourage applications on a 
prohibited basis.
    2. Affirmative advertising. A creditor may affirmatively solicit or 
encourage members of traditionally disadvantaged groups to apply for 
credit, especially groups that might not normally seek credit from that 
creditor.
    5(b) General rules concerning requests for information.
    1. Requests for information. This section governs the types of 
information that a creditor may gather. Section 202.6 governs how 
information may be used.

                            Paragraph 5(b)(2)

    1. Local laws. Information that a creditor is allowed to collect 
pursuant to a ``state'' statute or regulation includes information 
required by a local statute, regulation, or ordinance.
    2. Information required by Regulation C. Regulation C generally 
requires creditors covered by the Home Mortgage Disclosure Act (HMDA) to 
collect and report information about the race or national origin and sex 
of applicants for home improvement loans and home purchase loans, 
including some types of loans not covered by Sec. 202.13. Certain 
creditors with assets under $30 million, though covered by HMDA, are not 
required to collect and report these data; but they may do so at their 
option under HMDA, without violating the ECOA or Regulation B.
    3. Collecting information on behalf of creditors. Loan brokers, 
correspondents, or other persons do not violate the ECOA or Regulation B 
if they collect information that they are otherwise prohibited from 
collecting, where the purpose of collecting the information is to 
provide it to a creditor that is subject to the Home Mortgage Disclosure 
Act or another federal or state statute or regulation requiring data 
collection.
    5(d) Other limitations on information requests.

                            Paragraph 5(d)(1)

    1. Indirect disclosure of prohibited information. The fact that 
certain credit-related information may indirectly disclose marital 
status does not bar a creditor from seeking such information. For 
example, the creditor may ask about:
     The applicant's obligation to pay alimony, child support, 
or separate maintenance.
     The source of income to be used as the basis for repaying 
the credit requested, which could disclose that it is the income of a 
spouse.
     Whether any obligation disclosed by the applicant has a co-
obligor, which could disclose that the co-obligor is a spouse or former 
spouse.
     The ownership of assets, which could disclose the interest 
of a spouse.

                            Paragraph 5(d)(2)

    1. Disclosure about income. The sample application forms in appendix 
B to the regulation illustrate how a creditor may inform an

[[Page 56]]

applicant of the right not to disclose alimony, child support, or 
separate maintenance income.
    2. General inquiry about source of income. Since a general inquiry 
about the source of income may lead an applicant to disclose alimony, 
child support, or separate maintenance, a creditor may not make such an 
inquiry on an application form without prefacing the request with the 
disclosure required by this paragraph.
    3. Specific inquiry about sources of income. A creditor need not 
give the disclosure if the inquiry about income is specific and worded 
in a way that is unlikely to lead the applicant to disclose the fact 
that income is derived from alimony, child support or separate 
maintenance payments. For example, an application form that asks about 
specific types of income such as salary, wages, or investment income 
need not include the disclosure.
    5(e) Written applications.
    1. Requirement for written applications. The requirement of written 
applications for certain types of dwelling-related loans is intended to 
assist the federal supervisory agencies in monitoring compliance with 
the ECOA and the Fair Housing Act. Model application forms are provided 
in appendix B to the regulation, although use of a printed form of any 
kind is not required. A creditor will satisfy the requirement by writing 
down the information that it normally considers in making a credit 
decision. The creditor may complete the application on behalf of an 
applicant and need not require the applicant to sign the application.
    2. Telephone applications. A creditor that accepts applications by 
telephone for dwelling-related credit covered by Sec. 202.13 can meet 
the requirements for written applications by writing down pertinent 
information that is provided by the applicant(s).
    3. Computerized entry. Information entered directly into and 
retained by a computerized system qualifies as a written application 
under this paragraph. (See the commentary to section 202.13(b), 
Applications through electronic media and Applications through video.)

          Section 202.5a--Rules on Providing Appraisal Reports

    5a(a) Providing appraisals.
    1. Coverage. This section covers applications for credit to be 
secured by a lien on a dwelling, as that term is defined in 
Sec. 202.5a(c), whether the credit is for a business purpose (for 
example, a loan to start a business) or a consumer purpose (for example, 
a loan to finance a child's education).
    2. Renewals. If an applicant requests that a creditor renew an 
existing extension of credit, and the creditor obtains a new appraisal 
report to evaluate the request, this section applies. This section does 
not apply to a renewal request if the creditor uses the appraisal report 
previously obtained in connection with the decision to grant credit.
    5a(a)(2)(i) Notice.
    1. Multiple applicants. When an application that is subject to this 
section involves more than one applicant, the notice about the appraisal 
report need only be given to one applicant, but it must be given to the 
primary applicant where one is readily apparent.
    5a(a)(2)(ii) Delivery.
    1. Reimbursement. Creditors may charge for photocopy and postage 
costs incurred in providing a copy of the appraisal report, unless 
prohibited by state or other law. If the consumer has already paid for 
the report--for example, as part of an application fee--the creditor may 
not require additional fees for the appraisal (other than photocopy and 
postage costs).
    5a(c) Definitions.
    1. Appraisal reports. Examples of appraisal reports are:
    i. A report prepared by an appraiser (whether or not licensed or 
certified), including written comments and other documents submitted to 
the creditor in support of the appraiser's estimate or opinion of value.
    ii. A document prepared by the creditor's staff which assigns value 
to the property, if a third-party appraisal report has not been used.
    iii. An internal review document reflecting that the creditor's 
valuation is different from a valuation in a third party's appraisal 
report (or different from valuations that are publicly available or 
valuations such as manufacturers' invoices for mobile homes).
    2. Other reports. The term ``appraisal report'' does not cover all 
documents relating to the value of the applicant's property. Examples of 
reports not covered are:
    i. Internal documents, if a third-party appraisal report was used to 
establish the value of the property.
    ii. Governmental agency statements of appraised value.
    iii. Valuations lists that are publicly available (such as published 
sales prices or mortgage amounts, tax assessments, and retail price 
ranges) and valuations such as manufacturers' invoices for mobile homes.

       Section 202.6--Rules Concerning Evaluation of Applications

    6(a) General rule concerning use of information.
    1. General. When evaluating an application for credit, a creditor 
generally may consider any information obtained. However, a creditor may 
not consider in its evaluation of creditworthiness any information that 
it is barred by Sec. 202.5 from obtaining.
    2. Effects test. The effects test is a judicial doctrine that was 
developed in a series of employment cases decided by the Supreme Court 
under Title VII of the Civil Rights Act

[[Page 57]]

of 1964 (42 U.S.C. 2000e et seq.), and the burdens of proof for such 
employment cases were codified by Congress in the Civil Rights Act of 
1991 (42 U.S.C. 2000e-2). Congressional intent that this doctrine apply 
to the credit area is documented in the Senate Report that accompanied 
H.R. 6516, No. 94-589, pp. 4-5; and in the House Report that accompanied 
H.R. 6516, No. 94-210, p. 5. The act and regulation may prohibit a 
creditor practice that is discriminatory in effect because it has a 
disproportionately negative impact on a prohibited basis, even though 
the creditor has no intent to discriminate and the practice appears 
neutral on is face, unless the creditor practice meets a legitimate 
business need that cannot reasonably be achieved as well by means that 
are less disparate in their impact. For example, requiring that 
applicants have incomes in excess of a certain amount to qualify for an 
overdraft line of credit could mean that women and minority applicants 
will be rejected at a higher rate than men and non-minority applicants. 
If there is a demonstrable relationship between the income requirement 
and creditworthiness for the level of credit involved, however, use of 
the income standard would likely be permissible.
    6(b) Specific rules concerning use of information.

                            Paragraph 6(b)(1)

    1. Prohibited basis--marital status. A creditor may not use marital 
status as a basis for determining the applicant's creditworthiness. 
However, a creditor may consider an applicant's marital status for the 
purpose of ascertaining the creditor's rights and remedies applicable to 
the particular extension of credit. For example, in a secured 
transaction involving real property, a creditor could take into account 
whether state law gives the applicant's spouse an interest in the 
property being offered as collateral. Except to the extent necessary to 
determine rights and remedies for a specific credit transaction, a 
creditor that offers joint credit may not take the applicants' marital 
status into account in credit evaluations. Because it is unlawful for 
creditors to take marital status into account, creditors are barred from 
applying different standards in evaluating married and unmarried 
applicants. In making credit decisions, creditors may not treat joint 
applicants differently based on the existence, the absence, or the 
likelihood of a marital relationship between the parties.
    2. Prohibited basis--special purpose credit. In a special purpose 
credit program, a creditor may consider a prohibited basis to determine 
whether the applicant possesses a characteristic needed for eligibility. 
(See Sec. 202.8.)

                            Paragraph 6(b)(2)

    1. Favoring the elderly. Any system of evaluating creditworthiness 
may favor a credit applicant who is age 62 or older. A credit program 
that offers more favorable credit terms to applicants age 62 or older is 
also permissible; a program that offers more favorable credit terms to 
applicants at an age lower than 62 is permissible only if it meets the 
special-purpose credit requirements of Sec. 202.8.
    2. Consideration of age in a credit scoring system. Age may be taken 
directly into account in