Banking Practice Exam

Question: 1 / 400

Which Federal Reserve Regulation requires disclosure as to why a customer was denied credit?

AA

BB

Z

The correct answer is C, referring to Regulation Z, which is part of the Truth in Lending Act (TILA). Regulation Z mandates that lenders disclose specific information to consumers regarding credit terms, including the reasons for credit denial. When a consumer applies for credit and is subsequently denied, the lender is required to provide a notice that clearly states the specific reasons for the denial, ensuring transparency in the credit decision-making process. This regulation aims to protect consumers by making them aware of the factors that led to their denial, allowing them the opportunity to correct any misinformation or improve their creditworthiness.

Other regulations, like the Fair Credit Reporting Act, also play a role in credit reports and lending practices, but they do not specifically mandate the same level of detail regarding why credit was denied.

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C

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