Consumer Credit Reporting Agencies ActRequirements on Users of Consumer Credit Reports

Section § 1785.20

Explanation

If an individual's credit report leads to a negative decision like denied credit or higher insurance rates, the person making this decision must inform the consumer in writing. This notice must include the credit report details, the credit reporting agency's contact information, and explain their decision was influenced by the credit report. Also, the consumer has rights to get a free copy of their credit report within 60 days and to dispute any inaccuracies. If the decision wasn't based on a credit report but other information, the consumer can request an explanation within 60 days. However, if the person taking action had reasonable procedures in place to comply with these rules, they aren't liable for violating them.

(a)CA Civil Law Code § 1785.20(a) If any person takes any adverse action with respect to any consumer, and the adverse action is based, in whole or in part, on any information contained in a consumer credit report, that person shall do all of the following:
(1)CA Civil Law Code § 1785.20(a)(1) Provide written notice of the adverse action to the consumer.
(2)CA Civil Law Code § 1785.20(a)(2) Provide the consumer with the name, address, and telephone number of the consumer credit reporting agency which furnished the report to the person.
(3)CA Civil Law Code § 1785.20(a)(3) Provide a statement that the credit grantor’s decision to take adverse action was based in whole or in part upon information contained in a consumer credit report.
(4)CA Civil Law Code § 1785.20(a)(4) Provide the consumer with a written notice of the following rights of the consumer:
(A)CA Civil Law Code § 1785.20(a)(4)(A) The right of the consumer to obtain within 60 days a free copy of the consumer’s consumer credit report from the consumer credit reporting agency identified pursuant to paragraph (2) and from any other consumer credit reporting agency which compiles and maintains files on consumers on a nationwide basis.
(B)CA Civil Law Code § 1785.20(a)(4)(B) The right of the consumer under Section 1785.16 to dispute the accuracy or completeness of any information in a consumer credit report furnished by the consumer credit reporting agency.
(b)CA Civil Law Code § 1785.20(b) Whenever credit or insurance for personal, family, or household purposes involving a consumer is denied or the charge for such credit is increased either wholly or in part because of information obtained from a person other than a consumer credit reporting agency bearing upon consumer’s credit worthiness or credit standing, the user of that information shall, within a reasonable period of time, and upon the consumer’s written request for the reasons for that adverse action received within 60 days after learning of the adverse action, disclose the nature and substance of the information to the consumer. The user of the information shall clearly and accurately disclose to the consumer his or her right to make such a written request at the time the adverse action is communicated to the consumer.
(c)CA Civil Law Code § 1785.20(c) No person shall be held liable for any violation of this section if he or she shows by a preponderance of the evidence that at the time of the alleged violation he or she maintained reasonable procedures to assure compliance with this section.
(d)CA Civil Law Code § 1785.20(d) Nothing in this chapter shall excuse compliance with the requirements of Section 1787.2.
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Section § 1785.20

Explanation

This law requires that if a company sends a credit offer to a consumer based on information in their credit report, they must clearly tell the consumer: 1) their credit report was used, 2) they qualified due to certain creditworthiness criteria, 3) the credit offer might be withdrawn if they don't meet these criteria upon responding, and 4) they can opt-out of future credit offers not initiated by them. Exceptions apply if the company using the credit report is affiliated with the one that obtained it and meets specific disclosure and consent requirements. Additionally, a person cannot be denied credit for refusing to consent to sharing their credit report, unless it's necessary for credit from an affiliate.

(a)CA Civil Law Code § 1785.20(a) Except as provided in subdivision (b), any person who uses a consumer credit report in connection with any credit transaction not initiated by the consumer and which consists of a firm offer of credit shall provide with any solicitation made to the consumer a clear and conspicuous statement as to all of the following:
(1)CA Civil Law Code § 1785.20(a)(1) Information contained in the consumer’s prequalifying report was used in connection with the transaction.
(2)CA Civil Law Code § 1785.20(a)(2) The consumer received the offer of credit, because the consumer satisfied the criteria for creditworthiness under which the consumer was selected for the offer.
(3)CA Civil Law Code § 1785.20(a)(3) Where applicable, the credit may not be extended if, after the consumer responds to the offer, the consumer does not meet the criteria used to select the consumer for the offer.
(4)CA Civil Law Code § 1785.20(a)(4) The consumer has a right to prohibit use of information contained in the consumer’s file with any consumer credit reporting agency in connection with any credit transaction that is not initiated by the consumer. The consumer may exercise this right by notifying the notification system or joint notification system established under subdivision (d) or (e) of Section 1785.11.
(b)CA Civil Law Code § 1785.20(b) Subdivision (a) does not apply to any person using a prequalifying report if all of the following conditions are met:
(1)CA Civil Law Code § 1785.20(b)(1) The person using the prequalifying report is affiliated by common ownership or common corporate control with the person who procured the report.
(2)CA Civil Law Code § 1785.20(b)(2) The person who procures the prequalifying report from the consumer credit reporting agency clearly and conspicuously discloses to the consumer to whom the report relates, before the prequalifying report is provided to the person who uses the report, that the prequalifying report might be provided to, and used by, persons affiliated in the manner specified in paragraph (1) with the person that procured the report.
(3)CA Civil Law Code § 1785.20(b)(3) The consumer consents in writing to this provision and use of the prequalifying report.
(c)CA Civil Law Code § 1785.20(c) No person shall be denied credit on the basis of the consumer’s refusal to provide consent pursuant to paragraph (3) of subdivision (b), unless that consent is necessary for the extension of credit, related to that transaction, by an affiliate.
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Section § 1785.20

Explanation

If you apply for a home loan using a credit score, the lender must give you a copy of the credit score and key factors affecting it. This information must come from a credit reporting agency or be the same score the lender used. You should also receive a notice with the credit bureau's contact details if a credit score was involved. The lender doesn’t have to explain the score or disclose other information beyond the score and key factors. They also aren't responsible for any missing info or mistakes from the credit reporting agency. You're encouraged to check your credit report for accuracy, as credit scores help decide if you get the loan and at what rate.

Any person who makes or arranges loans and who uses a consumer credit score as defined in Section 1785.15.1 in connection with an application initiated or sought by a consumer for a closed end loan or establishment of an open end loan for a consumer purpose that is secured by one to four units of residential real property shall provide the following to the consumer as soon as reasonably practicable:
(a)CA Civil Law Code § 1785.20(a) A copy of the information identified in subdivision (a) of Section 1785.15.1 that was obtained from a credit reporting agency or was developed and used by the user of the information. In addition to the information provided to it by a third party that provided the credit score or scores, a lender is only required to provide the notice contained in subdivision (d).
(b)CA Civil Law Code § 1785.20(b) If a person who is subject to this section uses an automated underwriting system to underwrite a loan, that person may satisfy the obligation to provide a credit score by disclosing a credit score and associated key factors supplied by a consumer credit reporting agency. However, if a numerical credit score is generated by an automated underwriting system used by an enterprise, and that score is disclosed to the person, it shall be disclosed to the consumer consistent with subdivision (c). For purposes of this subdivision, the term “enterprise” shall have the meaning provided in paragraph (6) of Section 4502 of Title 12 of the United States Code.
(c)CA Civil Law Code § 1785.20(c) A person subject to the provisions of this section who uses a credit score other than a credit score provided by a consumer reporting agency may satisfy the obligation to provide a credit score by disclosing a credit score and associated key factors supplied by a consumer credit reporting agency.
(d)CA Civil Law Code § 1785.20(d) A copy of the following notice, which shall include the name, address, and telephone number of each credit bureau providing a credit score that was used:
In connection with your application for a home loan, the lender must disclose to you the score that a credit bureau distributed to users and the lender used in connection with your home loan, and the key factors affecting your credit scores.
The credit score is a computer generated summary calculated at the time of the request and based on information a credit bureau or lender has on file. The scores are based on data about your credit history and payment patterns. Credit scores are important because they are used to assist the lender in determining whether you will obtain a loan. They may also be used to determine what interest rate you may be offered on the mortgage. Credit scores can change over time, depending on your conduct, how your credit history and payment patterns change, and how credit scoring technologies change.
Because the score is based on information in your credit history, it is very important that you review the credit-related information that is being furnished to make sure it is accurate. Credit records may vary from one company to another.
If you have questions about your credit score or the credit information that is furnished to you, contact the credit bureau at the address and telephone number provided with this notice, or contact the lender, if the lender developed or generated the credit score. The credit bureau plays no part in the decision to take any action on the loan application and is unable to provide you with specific reasons for the decision on a loan application.
If you have questions concerning the terms of the loan, contact the lender.
(e)CA Civil Law Code § 1785.20(e) This section shall not require any person to do the following:
(1)CA Civil Law Code § 1785.20(e)(1) Explain the information provided pursuant to Section 1785.15.1.
(2)CA Civil Law Code § 1785.20(e)(2) Disclose any information other than a credit score or key factor, as defined in Section 1785.15.1.
(3)CA Civil Law Code § 1785.20(e)(3) Disclose any credit score or related information obtained by the user after a loan has closed.
(4)CA Civil Law Code § 1785.20(e)(4) Provide more than one disclosure per loan transaction.
(5)CA Civil Law Code § 1785.20(e)(5) Provide the disclosure required by this section when another person has made the disclosure to the consumer for that loan transaction.
(f)CA Civil Law Code § 1785.20(f) Any person’s obligation pursuant to this section shall be limited solely to providing a copy of the information that was received from the consumer credit reporting agency. No person has liability under this section for the content of that information or for the omission of any information within the report provided by the consumer credit reporting agency.
(g)CA Civil Law Code § 1785.20(g) As used in this section, the term “person” does not include an “enterprise” as defined in paragraph (6) of Section 4502 of Title 12 of the United States Code.
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Section § 1785.20

Explanation

If someone uses your credit report to approve new credit and finds your name, address, or social security number doesn't match up, they must verify the information to avoid identity theft. If creditors know someone is a victim of identity theft, they must take steps to confirm the identity before allowing more credit. If this isn't done and you suffer damages, you can sue for damages and expenses. The term 'identity theft' has a specific legal definition. There are exceptions: certain credit extensions don't count, and resellers of credit info aren't covered by all rules. Also, military post office addresses aren't subject to these requirements.

(a)CA Civil Law Code § 1785.20(a) Any person who uses a consumer credit report in connection with the approval of credit based on an application for an extension of credit, and who discovers that the consumer’s first and last name, address, or social security number, on the credit application does not match, within a reasonable degree of certainty, the consumer’s first and last name, address or addresses, or social security number listed, if any, on the consumer credit report, shall take reasonable steps to verify the accuracy of the consumer’s first and last name, address, or social security number provided on the application to confirm that the extension of credit is not the result of identity theft, as defined in Section 1798.92.
(b)CA Civil Law Code § 1785.20(b) Any person who uses a consumer credit report in connection with the approval of credit based on an application for an extension of credit, and who has received notification pursuant to subdivision (k) of Section 1785.16 that the applicant has been a victim of identity theft, as defined in Section 1798.92, may not lend money or extend credit without taking reasonable steps to verify the consumer’s identity and confirm that the application for an extension of credit is not the result of identity theft.
(c)CA Civil Law Code § 1785.20(c) Any consumer who suffers damages as a result of a violation of this section by any person may bring an action in a court of appropriate jurisdiction against that person to recover actual damages, court costs, attorney’s fees, and punitive damages of not more than thirty thousand dollars ($30,000) for each violation, as the court deems proper.
(d)CA Civil Law Code § 1785.20(d) As used in this section, “identity theft” has the meaning given in subdivision (b) of Section 1798.92.
(e)CA Civil Law Code § 1785.20(e) For the purposes of this section, “extension of credit” does not include an increase in an existing open-end credit plan, as defined in Regulation Z of the Federal Reserve System (12 C.F.R. 226.2), or any change to or review of an existing credit account.
(f)CA Civil Law Code § 1785.20(f) If a consumer provides initial written notice to a creditor that he or she is a victim of identity theft, as defined in subdivision (d) of Section 1798.92, the creditor shall provide written notice to the consumer of his or her rights under subdivision (k) of Section 1785.16.
(g)CA Civil Law Code § 1785.20(g) The provisions of subdivisions (k) and (l) of Section 1785.16 do not apply to a consumer credit reporting agency that acts only as a reseller of credit information by assembling and merging information contained in the database of another consumer credit reporting agency or the databases of multiple consumer credit reporting agencies, and does not maintain a permanent database of credit information from which new credit reports are produced.
(h)CA Civil Law Code § 1785.20(h) This section does not apply if one of the addresses at issue is a United States Army or Air Force post office address or a United States Fleet post office address.
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Section § 1785.20

Explanation

Landlords or tenant screening companies can't use someone’s unpaid rent from the COVID-19 pandemic as a reason to deny their housing application if they would otherwise qualify for the rental.

A housing provider, tenant screening company, or other entity that evaluates tenants on behalf of a housing provider shall not use an alleged COVID-19 rental debt, as defined in Section 1179.02 of the Code of Civil Procedure, as a negative factor for the purpose of evaluating a prospective housing application or as the basis for refusing to rent a dwelling unit to an otherwise qualified prospective tenant.
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Section § 1785.20

Explanation

This law requires employers to inform job candidates before using their credit report for employment decisions. The notice must include the purpose of the report and its source. Applicants can request a free copy of the report when the employer requests one. If a job is denied due to the credit report, the employer must inform the candidate and provide the credit report agency's contact information. Employers are not liable for violations if they can prove they had reasonable measures in place to comply with these rules.

(a)CA Civil Law Code § 1785.20(a) Prior to requesting a consumer credit report for employment purposes, the user of the report shall provide written notice to the person involved. The notice shall inform the person that a report will be used, and shall identify the specific basis under subdivision (a) of Section 1024.5 of the Labor Code for use of the report. The notice shall also inform the person of the source of the report, and shall contain a box that the person may check off to receive a copy of the credit report. If the consumer indicates that he or she wishes to receive a copy of the report, the user shall request that a copy be provided to the person when the user requests its copy from the credit reporting agency. The report to the user and to the subject person shall be provided contemporaneously and at no charge to the subject person.
(b)CA Civil Law Code § 1785.20(b) Whenever employment involving a consumer is denied either wholly or partly because of information contained in a consumer credit report from a consumer credit reporting agency, the user of the consumer credit report shall so advise the consumer against whom the adverse action has been taken and supply the name and address or addresses of the consumer credit reporting agency making the report. No person shall be held liable for any violation of this section if he or she shows by a preponderance of the evidence that, at the time of the alleged violation, he or she maintained reasonable procedures to assure compliance with this section.
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Section § 1785.20

Explanation

If someone is looking at your credit report to decide whether to approve you for credit, they can't hold any medical debt on your report against you.

A person who uses a consumer credit report in connection with a credit transaction shall not use a medical debt listed on the report as a negative factor when making a credit decision.
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Section § 1785.21

Explanation

This law allows a user, like a lender or landlord, to inform a consumer that they can ask a credit reporting agency to investigate any disputed information in the consumer's credit report. The credit agency may ask for proper identification and require the request to be in writing. Once the request is verified, the agency must quickly review the dispute and update both the user and the consumer on the current status of the disputed information. Anyone providing this information is not legally liable for doing so.

(a)CA Civil Law Code § 1785.21(a) A user in its discretion may notify the consumer that upon request the user may contact the consumer reporting agency and request that the consumer reporting agency investigate the current status of an item or items of information contained in the consumer report if the consumer disputes the completeness or accuracy of an item or items of information as provided to the user.
(b)CA Civil Law Code § 1785.21(b) The consumer credit reporting agency may require identification from the user to insure the validity of the request and, in that regard, may require that the request be put in writing with proper identification.
(c)CA Civil Law Code § 1785.21(c) In the event that any such request is made and identification given in the form or manner demanded by the consumer credit reporting agency, such agency shall review the file of the consumer and report the current status of the disputed information to the user and the consumer by the most expeditious means possible.
(d)CA Civil Law Code § 1785.21(d) No user who furnishes information pursuant to this section shall be liable to any person for furnishing such information.
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Section § 1785.22

Explanation

This section explains that if a person wants to resell a consumer credit report, they have to first let the reporting agency know who the final user will be and why they need it. Also, the reseller must have procedures in place to make sure the report is only used for approved reasons. They must identify and confirm who will use the report and make sure these users agree to use it for the right reasons. Before selling the report, they need to check the identities and purposes provided are accurate.

(a)CA Civil Law Code § 1785.22(a) A person may not procure a consumer credit report for the purpose of reselling the report or any information therein unless the person discloses to the consumer credit reporting agency which issues the report the identity of the ultimate end user and each permissible purpose for which the report is furnished to the end user of the consumer credit report or information therein.
(b)CA Civil Law Code § 1785.22(b) A person that procures a consumer credit report for the purpose of reselling the report or any information therein shall do all of the following:
(1)CA Civil Law Code § 1785.22(b)(1) Establish and comply with reasonable procedures designed to ensure that the consumer credit report or information is resold by the person only for a purpose for which the report may be furnished under this title. These procedures shall include all of the following:
(A)CA Civil Law Code § 1785.22(b)(1)(A) Identification of each prospective user of the resold consumer credit report or information.
(B)CA Civil Law Code § 1785.22(b)(1)(B) Certification of each purpose for which the consumer credit report or information will be used.
(C)CA Civil Law Code § 1785.22(b)(1)(C) Certification that the consumer credit report or information will be used for no other purpose.
(2)CA Civil Law Code § 1785.22(b)(2) Before reselling the consumer credit report or information, the person shall make reasonable efforts to verify the identities and certifications made under paragraph (1).
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