CONSUMER CREDIT REPORTING AGENCIES ACT
CHAPTER 1. GENERAL PROVISIONS
California Civil Code Section 1785.1-1785.6
1785.1. The Legislature finds and declares as follows:
(a) An elaborate mechanism has been developed for investigating
and evaluating the credit worthiness, credit standing, credit
capacity, and general reputation of consumers.
(b) Consumer credit reporting agencies have assumed a vital role
in assembling and evaluating consumer credit and other information on
(c) There is a need to insure that consumer credit reporting
agencies exercise their grave responsibilities with fairness,
impartiality, and a respect for the consumer's right to privacy.
(d) It is the purpose of this title to require that consumer
credit reporting agencies adopt reasonable procedures for meeting the
needs of commerce for consumer credit, personnel, insurance, hiring
of a dwelling unit, and other information in a manner which is fair
and equitable to the consumer, with regard to the confidentiality,
accuracy, relevancy, and proper utilization of such information in
accordance with the requirements of this title.
(e) The Legislature hereby intends to regulate consumer credit
reporting agencies pursuant to this title in a manner which will best
protect the interests of the people of the State of California.
(f) The extension of credit is a privilege and not a right.
Nothing in this title shall preclude a creditor from denying credit
to any applicant providing such denial is based on factors not
inconsistent with present law.
(g) Any clauses in contracts which prohibit any action required by
this title are not in the public interest and shall be considered
unenforceable. This shall not invalidate the other terms of such a
1785.2. This act may be referred to as the Consumer Credit
Reporting Agencies Act.
1785.3. The following terms as used in this title have the meaning
expressed in this section:
(a) "Adverse action" means a denial or revocation of credit, a
change in the terms of an existing credit arrangement which is
adverse to the interests of the consumer, or a refusal to grant
credit in substantially the amount or on substantially the terms
requested. "Adverse action" includes all of the following:
(1) Any denial of, increase in any charge for, or reduction in the
amount of, insurance for personal, family, or household purposes
made in connection with the underwriting of insurance.
(2) Any denial of employment or any other decision made for
employment purposes which adversely affects any current or
(3) Any action taken, or determination made, with respect to a
consumer (A) for an application for an extension of credit, or an
application for the hiring of a dwelling unit, and (B) that is
adverse to the interests of the consumer.
"Adverse action" does not include (A) a refusal to extend
additional credit to a consumer under an existing credit arrangement
if (i) the applicant is delinquent or otherwise in default under that
credit arrangement or (ii) the additional credit would exceed a
credit limit previously established for the consumer or (B) a refusal
or failure to authorize an account transaction at a point of sale.
(b) "Consumer" means a natural individual.
(c) "Consumer credit report" means any written, oral, or other
communication of any information by a consumer credit reporting
agency bearing on a consumer's credit worthiness, credit standing, or
credit capacity, which is used or is expected to be used, or
collected in whole or in part, for the purpose of serving as a factor
in establishing the consumer's eligibility for: (1) credit to be
used primarily for personal, family, or household purposes, or (2)
employment purposes, or (3) hiring of a dwelling unit, as defined in
subdivision (c) of Section 1940, or (4) other purposes authorized in
The term does not include (1) any report containing information
solely as to transactions or experiences between the consumer and the
person making the report, (2) any communication of that information
or information from a credit application by a consumer that is
internal within the organization that is the person making the report
or that is made to an entity owned by, or affiliated by corporate
control with, that person; provided that the consumer is informed by
means of a clear and conspicuous written disclosure that information
contained in the credit application may be provided to these persons;
however, where a credit application is taken by telephone,
disclosure shall initially be given orally at the time the
application is taken, and a clear and conspicuous written disclosure
shall be made to the consumer in the first written communication to
that consumer after the application is taken, (3) any authorization
or approval of a specific extension of credit directly or indirectly
by the issuer of a credit card or similar device, (4) any report by a
person conveying a decision whether to make a specific extension of
credit directly or indirectly to a consumer in response to a request
by a third party, if the third party advises the consumer of the name
and address of the person to whom the request was made and the
person makes the disclosures to the consumer required under Section
1785.20, (5) any report containing information solely on a consumer's
character, general reputation, personal characteristics, or mode of
living which is obtained through personal interviews with neighbors,
friends, or associates of the consumer reported on, or others with
whom he is acquainted or who may have knowledge concerning those
items of information, (6) any communication about a consumer in
connection with a credit transaction which is not initiated by the
consumer, between persons who are affiliated (as defined in Section
150 of the Corporations Code) by common ownership or common corporate
control (as defined by Section 160 of the Corporations Code), if
either of those persons has complied with paragraph (2) of
subdivision (b) of Section 1785.20.1 with respect to a prequalifying
report from which the information communicated is taken and provided
the consumer has consented to the provision and use of the
prequalifying report in writing, or (7) any consumer credit report
furnished for use in connection with a transaction which consists of
an extension of credit to be used solely for a commercial purpose.
(d) "Consumer credit reporting agency" means any person who, for
monetary fees, dues, or on a cooperative nonprofit basis, regularly
engages in whole or in part in the business of assembling or
evaluating consumer credit information or other information on
consumers for the purpose of furnishing consumer credit reports to
third parties, but does not include any governmental agency whose
records are maintained primarily for traffic safety, law enforcement,
or licensing purposes.
(e) "Credit transaction that is not initiated by the consumer"
does not include the use of a consumer credit report by an assignee
for collection or by a person with which the consumer has an account
for purposes of (1) reviewing the account or (2) collecting the
account. For purposes of this subdivision, "reviewing the account"
includes activities related to account maintenance and monitoring,
credit line increases, and account upgrades and enhancements.
(f) "Employment purposes," when used in connection with a consumer
credit report, means a report used for the purpose of evaluating a
consumer for employment, promotion, reassignment, or retention as an
(g) "File," when used in connection with information on any
consumer, means all of the information on that consumer recorded and
retained by a consumer credit reporting agency, regardless of how the
information is stored.
(h) "Firm offer of credit" means any offer of credit to a consumer
that will be honored if, based on information in a consumer credit
report on the consumer and other information bearing on the
creditworthiness of the consumer, the consumer is determined to meet
the criteria used to select the consumer for the offer and the
consumer is able to provide any real property collateral specified in
the offer. For purposes of this subdivision, the phrase "other
information bearing on the creditworthiness of the consumer" means
information that the person making the offer is permitted to consider
pursuant to any rule, regulation, or formal written policy statement
relating to the federal Fair Credit Reporting Act, as amended (15
U.S.C. Sec. 1681 et seq.), promulgated by the Federal Trade
Commission or any federal bank regulatory agency.
(i) "Item of information" means any of one or more informative
entries in a credit report which causes a creditor to deny credit to
an applicant or increase the cost of credit to an applicant or deny
an applicant a checking account with a bank or other financial
(j) "Person" means any individual, partnership, corporation,
trust, estate, cooperative, association, government or governmental
subdivision or agency, or other entity.
(k) "Prequalifying report" means a report containing the limited
information permitted under paragraph (2) of subdivision (b) of
(l) "State or local child support enforcement agency" means the
Department of Child Support Services or local child support agency
acting pursuant to Division 17 (commencing with Section 17000) of the
Family Code to establish, enforce or modify child support
obligations, and any state or local agency or official that succeeds
to these responsibilities under a successor statute.
1785.4. Nothing in this title shall apply to any person licensed
pursuant to the provisions of Chapter 11 (commencing with Section
7500) of Division 3 of the Business and Professions Code, or to any
employee of such person, unless such person is employed directly by a
consumer credit reporting agency.
1785.5. Any person who, for monetary fees, dues, or on a
cooperative nonprofit basis, regularly engages in whole or in part in
the practice of assembling, evaluating, or disseminating information
on the checking account experiences of consumer customers of banks
or other financial institutions is subject to the same laws which
govern consumer credit reporting agencies.
1785.6. The notices and disclosures to consumers provided for in
this title shall be required to be made only to those consumers who
have a mailing address in California.
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