United States
Hong KongThree responses to a completed application under Regulation B
Under Regulation B, a creditor generally must notify an applicant of action on a completed credit application within 30 days.
More key points
- The result may be approval, a counteroffer, or adverse action with the required notice.
- If the applicant does not accept a counteroffer within 90 days, the creditor must send an adverse-action notice.
On this page7 sections
A completed credit application triggers a timing rule under the Equal Credit Opportunity Act's Regulation B. For exam purposes, distinguish the three basic outcomes: grant the credit requested, offer different terms, or deny/take another adverse action.
The 30-day notice period
Under 12 CFR §1002.9(a)(1), a creditor generally must notify the applicant of action taken within 30 days after receiving a completed application. “Completed” means the creditor has received all information it regularly obtains and considers in evaluating applications for the amount and type of credit requested. Separate timing rules apply to incomplete applications and existing accounts.
Three possible outcomes
| Outcome | What the creditor does |
|---|---|
| Approval | Notify the applicant of approval or that the requested credit is available, subject to the terms stated. |
| Counteroffer | Notify the applicant that different credit terms are offered. If the applicant accepts, the creditor need not treat the original request as denied for this notice rule. |
| Adverse action | Send notice of the action and the required information about the right to obtain the specific reasons, or provide the specific reasons directly as permitted. |
Counteroffer is not automatically an adverse-action notice
A counteroffer changes requested terms, such as amount, rate, or collateral. If the applicant expressly accepts the counteroffer, Regulation B generally treats the original request as not having been denied. If the applicant does not accept within 90 days, the creditor must provide an adverse-action notice. A creditor may instead send an adverse-action notice at the time of the counteroffer, with the right-to-reasons disclosure, avoiding a later notice if it is not accepted.
What an adverse-action notice includes
The notice must tell the applicant that adverse action was taken, provide the creditor's name and address, explain the ECOA anti-discrimination protection and enforcement agency, and state the right to receive the specific reasons within 60 days after a request. The creditor can provide the specific reasons in the notice instead. Generic language such as “did not meet internal standards” is not a substitute for specific reasons when the creditor elects to state them.
Do not confuse a completed application with an incomplete one
If an application is incomplete, the creditor has a different set of choices. It may take adverse action based on the information available, notify the applicant of the information needed and a reasonable deadline, or follow the applicable incomplete-application process. Do not apply the completed-application three-outcome rule without first checking whether the creditor has the information it normally requires.
Common exam traps
- Starting the 30-day period from a date other than receipt of the completed application.
- Calling a counteroffer an automatic denial when the applicant accepts it.
- Forgetting the 90-day follow-up if the counteroffer is not accepted.
- Confusing the 60-day period to request reasons with the creditor's 30-day action-notice period.
- Using the incomplete-application rule for an application that is complete.
Key takeaway
For a completed application: act and notify within 30 days. Identify approval, counteroffer, or adverse action; a counteroffer left unanswered for 90 days requires an adverse-action notice.
Common questions
How long does a creditor have to notify an applicant about a completed application?
Generally 30 days after receiving the completed application.
What happens if the applicant does not accept a counteroffer?
If it is not accepted within 90 days, the creditor must provide an adverse-action notice, unless it already sent that notice with the counteroffer.
How long does an applicant have to request specific reasons for adverse action?
The applicant must request reasons within 60 days after receiving the adverse-action notice.