Board of Governors of the Federal Reserve System (Board) and Federal Trade Commission (Commission) FCRA Risk-Based Pricing Rule Amendments, #00003 

Submission Number:
Michael Poulos
Michigan First Credit Union
Initiative Name:
Board of Governors of the Federal Reserve System (Board) and Federal Trade Commission (Commission) FCRA Risk-Based Pricing Rule Amendments,

Re: Proposed Rule – FCRA Risk-Based Pricing Rule Amendments: Project No. R411009 Docket #R-1407 Dear Ms. Johnson: I am writing to address the five proposed pieces of additional information proposed to be included in the risk-based pricing notices. We have no objection to listing the following: • The credit score used in making the credit decision • The range of possible scores under the model used • The date on which the credit score was created • The name of the consumer reporting agency used We strongly object to including: • All of the key factors that adversely affected the credit score, which may not exceed four factors, except that if one of the factors is the number of inquiries made with respect to the consumer report, the number of key factors shall not exceed five. On behalf of our credit union, I have personally taught seminars on the composition of credit scores for over a decade. In addition, I have personally underwritten thousands of loan applications in the last 20 years. The credit report routinely lists three or four reasons about factors that negatively affect the score. My experience as noted above has shown that the factors they identify rarely accurately identify why a score is what it is or how it could be higher. We routinely in our seminars, tell them to ignore the factors listed and have taught them other more relevant factors that impact their score. For example, a consumer with a score of 802 (virtually perfect) still gets four reasons why the score isn’t higher. It is similar to a student getting a 99 on a test and the teacher is required to give them four reasons why the score wasn’t 100. When these situations come up, we then have to reassure the consumer that the factors are not relevant. If you force us to include the factors on the notice, you will be doing consumers a significant disservice. In addition, because they will be confused as to the relevance of the factors, they will be asking us what they mean and we will tell them to ignore them, as we do in our seminars. Credit scores, depending upon the model used, function differently between models and you would be adding significant confusion to the process. You would be much better served reminding the consumer that various factors impact their score and recommend they seek the advice of their financial institution on how to improve their score. Finally, besides being of no value, the programming costs to automate the printing of the factors would be significant. In conclusion, the proposed addition as mentioned above provides no value to the consumer and actually causes an unintended consequence of confusing them. Please do not include that one reason. Sincerely, Michael D. Poulos President/CEO