The Federal Trade Commission said today that federal law does not require credit bureaus to disclose "risk scores" to consumers who request copies of their credit reports. The FTC reminds consumers, however, that they still are entitled to see their credit reports and to learn from creditors what in their reports led to denial of credit, if that happens. Today's Commission action follows review of more than 300 pages of public filings in response to the FTC's request of last summer for comments on its 1992 interpretation of the Fair Credit Reporting Act (FCRA), in which the FTC said the FCRA did require disclosure of risk scores.
A risk score is a statistical assessment of the data in a consumer's credit file. Credit bureaus often calculate and provide risk scores to their clients -- which include creditors such as banks and department stores -- along with the consumer's credit report. Risk scores are generated upon each client's request, based on data in the consumer's file at that time.
The FCRA, which is enforced by the FTC, gives consumers the right to obtain the nature and substance of all information (except medical information) that is in a credit bureau's files on them at the time they make a request for such information. Because risk scores are not in the consumer's file, the FTC concluded that the FCRA did not require their disclosure.
In 1992, the FTC announced that it would interpret the FCRA to require disclosure of risk scores. Many members of the credit industry thereafter requested clarification on several issues, including what type of explanation had to be given to consumers along with the scores, and whether the score to be disclosed had to be based on the consumer's credit report at the time the consumer requested disclosure or the report as it existed when the score was provided to the credit bureau's client. The FTC then published a notice in the Federal Register setting forth a proposed interpretation to address those issues and sought public comments on a series of questions.
According to the follow-up notice published in today's Federal Register, consumer representatives who commented said that, if credit bureau clients get consumers' risk scores, then consumers should get them as well. Industry commenters made the point, however, that the FCRA requires a credit bureau to disclose only the "nature and substance of all information . . . in its files on the consumer at the time of the request" for disclosure by the consumer, not a statistical assessment of that information such as a "risk score" that is not retained in the file. They also set forth the substantial costs of providing and explaining risk scores, and questioned whether more consumers might be confused when confronted by an array of scores and explanations than would benefit from seeing them. Among other things, they noted that consumers have legal access to information much more significant than a numerical score -- the underlying information in their credit files (under the FCRA), and a statement of why any credit bureau client rejected their credit applications (under the Equal Credit Opportunity Act).
The Commission vote to take this action was 5-0.
Copies of today's Federal Register notice are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov
(FTC File No. P854812)