California real estate disclosure laws California Real Estate Disclosures | Page 63

In addition to the foregoing federal law, state law regulates the issuance of
consumer credit reports, access by the consumer to such reports, and the
obligations of credit reporting agencies. Also, users of consumer credit
reports are subject to the requirements of state law and must provide notice
to the consumer when credit is denied.
(15 U.S.C. § 1691 et. seq.; 12 C.F.R. PART 202 et. seq. (REG. B); CAL. CIV.
§ 1785.1 et. seq.)

O. Certain Obligations of Consumer Credit Reporting
Agencies
Since 2000 numerous amendments or additions to the Consumer Credit
Reporting Law have been made by the California Legislature. Most of these
changes have occurred as a result of growing incidences of credit and
identity fraud and as a result of the adoption by various lenders/creditors of
the use of credit scores as a means of measuring a consumer’s credit history
and to permit near instant evaluation of the credit risk presented by a
particular consumer/borrower.
The term “credit score” is defined as “… a numerical value or a
categorization derived from a statistical tool or modeling system used by a
person who makes or arranges a loan to predict the likelihood of certain
credit behaviors, including default. The numerical value of the
categorization derived from this analysis may also be referred to as a “risk
predictor” or “risk score.” “Credit score” does not include any mortgage
score or rating of an automated underwriting system that considers one or
more factors in addition to credit information, including but not limited to,
the loan-to-value ratio, the amount of down payment, or a consumer’s
financial assets. “Credit score” does not include other elements of the
underwriting process or underwriting decisions.
To establish a consumer’s “credit score,” certain relevant elements or
reasons are identified which are believed by the developers of this system to
affect the “credit score” for the particular consumer/borrower. The elements
or reasons are defined in the Civil Code as “key factors.”
When a “credit score” has been issued on a particular individual or
consumer and the consumer is an applicant for a home loan, the consumer is
to receive the following notice:
NOTICE TO THE HOME LOAN APPLICANT
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.

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