Business Glossary

Federal Reserve regulation prohibiting discrimination against consumer credit applicants, and establishing guidelines for collecting and evaluating credit information. Regulation B prohibits creditors from discriminating on the basis of age, sex, race, color, religion, national origin, marital status, or receipt of public assistance. The regulation also requires creditors to give written notification of rejection, a statement of the applicant's rights under the Equal Credit Opportunity Act, and a statement listing reasons for rejection, or the applicant has the right to request the reasons. If an applicant was denied credit because of adverse information in a credit bureau report, the applicant is entitled to receive, at no cost, a copy of the bureau report. Creditors who furnish credit information when reporting information on married borrowers must report information in the name of each spouse.

Federal Reserve regulation implementing the consumer leasing provisions of the Truth in Lending Act, and covers leases on personal property for more than four months for family, personal, or household use. It requires leasing companies to disclose in writing the cost of a lease, including security deposit and monthly payments, taxes and other payments, and in the case of an open-end lease, whether a balloon payment may be applied. It also requires written disclosure of the terms of a lease, including insurance, guarantees, responsibility for servicing the property, and whether the lessee has an option to buy the property at lease termination.

federal law enacted in 1974 requiring lenders to give businesses and consumers equal access to credit. The act specifically prohibits credit discrimination on the basis of race, marital status, national origin, age, or dependence on public assistance. Borrowers who exercise their consumer rights under the Consumer Credit Protection Act are also protected from credit discrimination. Lenders are required to respond to credit applications within 30 days, and if the application is rejected, to offer reasons for denying credit. The act is implemented by Federal Reserve Regulation B.

in consumer credit, denial of an applicant's credit application. If turned down because of derogatory information in a credit report, the applicant is entitled to examine, without cost, his or her credit report and request corrections of any inaccurate negative information reported by a lender.

Federal Reserve Board regulation covering provisions of the consumer credit protection act of 1968, known as the Truth in Lending Act.

method of assessing the discriminatory impact of supposedly neutral credit policies. In general, the effects test works this way: a person who alleges illegal discrimination need only establish a prima facie case by showing that the action in question has a disproportionately discriminant effect on a member of a protected class, and therefore is discriminatory in effect. The statutory basis of the effects test is the Equal Credit Opportunity Act, which prohibits credit denials on the basis of marital status, national origin, age, or whether applicants are receiving public assistance, and also the Fair Housing Act. The effects test is most frequently applied in evaluating the fairness of statistically based credit scoring systems and alternative mortgages, such as graduated payment mortgages, where future income is considered.

federal law enacted in 1970 to ensure confidentiality of consumer credit information held by lenders and credit reporting agencies. The act prohibits disclosure of credit files, other than for specific purposes, such as employment, insurance, and bona fide credit applications; requires credit bureaus to give consumers a copy of their credit report when requested; and specifies procedures whereby consumers can dispute any derogatory information in a credit report.

Federal Reserve Board regulation covering provisions of the consumer credit protection act of 1968, known as the Truth in Lending Act.