This is the second installment of three on Regulation B. In the last column we discussed Sections 202.2 and 202.9 of Regulation B.

This week I would like to discuss section 202.12 and comment on when it is appropriate to obtain a credit report.

Section 202.12 defines the amount of time applications and associated information is to be retained by the creditor if an adverse decision is reached.

The application and associated information must be retained for 25 months for consumer and 12 months for commercial from the time the applicant is notified of the adverse decision. 202.12(b)(1)(2).

In the case of a business with gross revenues in excess of $1,000,000 in its preceding fiscal year, the creditor shall retain the application and all records for at least 60 days after notifying the applicant of the action taken. If within that time period the applicant requests in writing the reasons for adverse action or that records be retained, the creditor shall retain the application and all records for 12 months. 209.12(5).

It would, therefore, appear that if Regulation B requires the following:

1) The applicant to be notified within a certain time of the action taken on its application for credit. 202.9.

2) Information be provided to the applicant concerning adverse decisions. 202.9(a)(b)(d)

3) Records be retained in the event of an adverse decision. 202.12 It is intended that a credit report be acquired only after credit or the extension of existing credit has been applied for.

Now, this is not to infer that a creditor cannot obtain information about a business or individuals background. This can be accomplished by using the marketing reports offered by many of the credit reporting agencies. These reports generally contain all information concerning a business or individual except the payment history has been deleted. Attending industry group meetings is another way of obtaining information.

In our next column we will discuss the penalities for not adhering to Regulation B.

Your questions or comments are always welcome.

Please address them to Davidb1947@aol.com.

I wish you well.