This title may be cited as “The Holden Credit Denial Disclosure Act of 1976.”
Consumer Credit DenialGeneral Provisions
Section § 1787.1
This law is officially called “The Holden Credit Denial Disclosure Act of 1976.”
Holden Credit Denial Disclosure Act 1976
Section § 1787.2
This law requires creditors to notify applicants about their credit application decisions within 30 days, or according to federal timelines. If credit is denied, the creditor must explain why, either directly or through a notice that lets the applicant request a written explanation. The reasons for denial must be specific, and can be given orally when the applicant is told they can request a written version. If a third party requests credit on the applicant's behalf, the creditor or the third party can provide the denial notice, but the creditor's identity must be revealed. The terms 'applicant', 'credit denial', and 'creditor' are clearly defined within the section.
(a)CA Civil Law Code § 1787.2(a) Within 30 days, or at a later reasonable time as specified in federal law or regulations, after receipt of a completed written application for credit, a creditor shall notify the applicant of its action on the application.
(b)CA Civil Law Code § 1787.2(b) Each applicant denied credit shall be entitled to a statement of reasons for such action from the creditor. A creditor satisfies this obligation by:
(1)CA Civil Law Code § 1787.2(b)(1) Providing statements of reasons in writing as a matter of course to applicants denied credit; or
(2)CA Civil Law Code § 1787.2(b)(2) Giving written notification of credit denial which discloses:
(i)CA Civil Law Code § 1787.2(b)(2)(i) The applicant’s right to a statement of reasons within 30 days after receipt by the creditor of a request made within 60 days after such notification; and
(ii)CA Civil Law Code § 1787.2(b)(2)(ii) The identity and address of the person or office from which the statement of reasons may be obtained.
(3)CA Civil Law Code § 1787.2(b)(3) The statement of reasons may be given orally if the written notification advises the applicant of the right to have the statement of reasons confirmed in writing on written request.
(c)CA Civil Law Code § 1787.2(c) A statement of reasons meets the requirements of this section only if it contains the specific reasons for the credit denial.
(d)CA Civil Law Code § 1787.2(d) Where a creditor has been requested by a third party to make a specific extension of credit directly or indirectly to an applicant, the notification and statement of reasons required by this section may be made directly by such creditor, or indirectly through the third party, provided in either case that the identity of the creditor is disclosed.
(e)CA Civil Law Code § 1787.2(e) For purposes of this section:
(1)CA Civil Law Code § 1787.2(e)(1) The term “applicant” means a natural person who applies for credit primarily for personal, family or household purposes.
(2)CA Civil Law Code § 1787.2(e)(2) The term “credit denial” means a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested. Such term does not include a refusal to extend additional credit under an
existing credit arrangement where the applicant is delinquent or otherwise in default, or where such additional credit would exceed a previously established credit limit without a specific written application or written request for an increase in the credit limit.
(3)CA Civil Law Code § 1787.2(e)(3) The term “creditor” refers only to creditors who regularly extend, or arrange for the extension of, credit whether in connection with loans, sales of property or services, or otherwise.
(f)CA Civil Law Code § 1787.2(f) Nothing in this section shall be construed to limit any authority, derived from other provisions of law, of any state department or agency.
credit application notification of action credit denial reasons
