AL 2001-6
Advisory Letter
Subject: Fair Credit Reporting Act
Date: July 6, 2001

TO:	Chief Executive Officers of National Banks, 
        Federal Branches and Agencies, Department and 
        Division Heads, and Examining Personnel

Last year, the Federal Trade Commission ("FTC") issued an
informal interpretive letter dated July 26, 2000, on the 
application of the Fair Credit Reporting Act ("FCRA") to 
business loan transactions.  Specifically, the FTC letter
addressed the ability of a lender to obtain a credit 
report on an individual who is a principal of a business 
loan applicant, or who personally guarantees or cosigns a 
business loan.  The FTC letter concluded that a lender 
would not be able to obtain a credit report in these 
circumstances without first obtaining the individual's 
written consent.

This position raised significant safety and soundness 
concerns, and the OCC's Chief Counsel's Office also 
disagreed with the interpretation.  Accordingly, 
examiners were instructed that they should not cite 
violations of the FCRA in examinations of banks that do 
not receive consumer consent before obtaining a credit 
report in connection with a business loan where the 
consumer guarantees or is otherwise personally liable on 
the loan.  Credit reports are important indicators of an 
obligor's credit record, and are regularly used by 
lenders in assessing the overall credit risk associated 
with this type of business loan transaction.  

Recently, at the written request of the OCC, OTS, FDIC, 
and Federal Reserve Board ("the agencies"), the FTC 
reconsidered the position previously communicated in its 
July 26, 2000, informal interpretive letter.  In a 
response dated June 22, 2001, the FTC agreed with the 
position previously taken by the agencies, and indicated 
that the FTC would consider its prior interpretive letter 
superseded to the extent it was inconsistent with that 
position.
 
This recent FTC action ensures uniformity among the 
agencies and the FTC, and confirms that a lender may 
obtain a credit report on an individual in connection 
with a business loan where the individual in question is 
or will be personally liable on the loan -- such as when 
the individual cosigns or guarantees the loan, or when 
the nominal credit applicant is the individual's sole 
proprietorship but the individual is liable on the debt.  
A lender in these circumstances may obtain a credit 
report in connection with both the underwriting of the 
loan and the review or collection of the account, without
the prior written consent of the individual. 


For further information, contact the Community & Consumer 
Law Division at (202) 874-5750 or the Credit Risk 
Division at (202) 874-5170.

Copies of the relevant letters are attached for your 
reference.




_________________________	________________________
Emory W. Rushton		Julie L. Williams
Senior Deputy Comptroller	First Senior Deputy 
Bank Supervision Policy		Comptroller and Chief 
				Counsel

Attachments