Consumer Credit Denials

Civil Code Division 3, Part 4, Title 1.6B deals with consumer credit denials in California. Article 1 contains general provisions. Section 1787.1 names this title “The Holden Credit Denial Disclosure Act of 1976.”

Section 1787.2 provides that, within 30 days, or at a later reasonable time as specified in federal law or regulations, after receipt of a completed written application for credit, a creditor is required to notify the applicant of its action on the application.

Each applicant denied credit is entitled to a statement of reasons for the action from the creditor. A creditor satisfies this obligation by following three specified activities. A statement of reasons meets the requirements of this section only if it contains the specific reasons for the credit denial.

Where a creditor has been requested by a third party to make a specific extension of credit directly or indirectly to an applicant, the notification and statement of reasons required by this section may be made directly by the creditor, or indirectly through the third party, provided in either case that the identity of the creditor is disclosed. The terms “applicant,” “credit denial,” and “creditor” are defined.