BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551


DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS


CA 02-6


March 28, 2002


TO OFFICERS AND MANAGERS IN CHARGE OF CONSUMER AFFAIRS:

RE: Compliance with Section 202.6(b)(6)(i) of Regulation B


For lenders who consider credit history in evaluating credit requests, Section 202.6(b)(6)(i) of Regulation B requires a lender to consider the credit history, "when available," of any account of an applicant's spouse on which the applicant is or was an "authorized user."1 Over the past several years, issues have arisen over how a lender can comply with this regulatory requirement, particularly for credit applications where a lender is prohibited from asking the marital status of an applicant. The purpose of this letter is to clarify how a lender can comply with Section 202.6(b)(6)(i) of Regulation B.

The key to complying with Section 202.6(b)(6)(i) is determining whether readily available information allows a lender to determine that an applicant is an authorized user on a spouse's account. The regulation's use of the terminology "when available" means that a lender is not required to investigate whether a spousal authorized user account exists. However, when such information is available, indicating that a spousal authorized user account exists, the lender must consider information about the account in the underwriting process.

An example of when information is "available," thus allowing a lender to determine that a spousal authorized user account exists, would include when the applicant provides the information on his or her own accord. An additional example would be when an applicant's credit bureau report lists not only an account on which the applicant is designated as an authorized user but also lists other information, such as the name(s) the account is in, that makes it clearly evident that it is an account of the applicant's spouse.

In contrast, when a credit bureau report only lists an account for which the applicant is an authorized user, a lender is not required to investigate further in order to determine whether it involves a spouse. In addition, when a home purchase or refinancing is secured by real estate and an authorized user account exists on an applicant's credit bureau report, even though a lender is required by regulation to ask the applicant his or her marital status, the lender is not required to determine whether the reported authorized user account is that of a spouse. The fact that further investigation would be necessary to determine whether the account involved a spouse means that such information is not "available" in accordance with the regulation. Thus, while such an investigation may be possible on certain real estate secured loans, it is not required.

In conclusion, a lender cannot have a blanket policy of ignoring or refusing to consider authorized user accounts. To comply with Section 202.6(b)(6)(i) of Regulation B, a lender, who considers credit history in evaluating credit requests, must consider spousal authorized user accounts when information is available that allows the lender to determine, without further investigation, that the applicant is an authorized user on a spouse's account.

Please send or make these procedures available to state member banks and foreign banking organizations in your district. Any questions regarding this regulatory requirement should be directed to the review examiner for your district.

Sincerely yours,
Shawn McNulty
Assistant Director


Footnote

1 Section 202.6(b)(6)(i) reads: "To the extent that a creditor considers credit history in evaluating the creditworthiness of similarly qualified applicants for a similar type and amount of credit, in evaluating an applicant's creditworthiness a credit shall consider (i) the credit history, when available, of accounts designated as accounts that the applicant and the applicant's spouse are permitted to use or for which both are contractually liable."