WHAT IS THE FAIR CREDIT REPORTING ACT?

The Fair Credit Reporting Act (FCRA) is a federal law that prescribes how your credit information can be collected, distributed, and used.

Under the FCRA, you have the right to view information in your credit file, dispute inaccurate information and obtain a free credit report when you receive a Notice of Adverse Action, and to receive a free credit report once every 12 months from each of the nationwide consumer reporting agencies: Equifax, Experian and TransUnion.

In addition to alerting you that information in your credit report resulted in an adverse action, the Notice of Adverse Action is also intended to encourage you to check your credit file to ensure the accuracy and completeness of any information contained therein.

For more information about the FCRA and how to obtain a free credit report, visit the U.S Federal Trade Commission's website.

WHAT DOES “ADVERSE ACTION” MEAN?

“Adverse action” is a legal term and its use in Essent’s Notice of Adverse Action is required by the FCRA. It means that we have denied some benefit (e.g., MI in general or the best possible MI rate) based on your credit score or other credit report information provided.

WHAT IS A CREDIT REPORT AND CREDIT SCORE?

A credit report is a detailed record of your credit history; it contains important financial information including how much debt you owe and your payment history.

A credit score is a numerical rating that predicts how likely you are to make your loan and other credit payments on time, and is based on the information in your credit report file at one or more of the consumer reporting agencies.

For more information on credit reports and credit scores, visit the U.S Federal Trade Commission's website.

WHEN WOULD I RECEIVE A NOTICE OF ADVERSE ACTION FROM ESSENT?

We would send a Notice of Adverse Action to you if your lender applied for mortgage insurance (MI) on your loan and, based on your credit score or other credit report information provided:

• we were unable to insure your mortgage loan
• the price we charged for your MI was not the lowest available price for the applicable loan program

MI companies, such as Essent, are required by law to provide Notices of Adverse Action in accordance with the FCRA.

WHICH CREDIT REPORT INFORMATION CAUSES MY MI PRICE TO BE HIGHER?

The credit score we use to determine the MI price applicable to your loan is based on information in your credit file at the consumer reporting agencies.

Consumer reporting agencies do not disclose the formulas behind their credit-scoring models, but most scores are based on a combination of several factors, including your payment history, how much money you owe and the length of your credit history.

The Notice of Adverse Action from Essent includes the key factors that influenced your credit score.

DOES ESSENT SEND NOTICES OF ADVERSE ACTION ON BOTH BORROWER-PAID AND LENDER-PAID MI?

We send Notices of Adverse Action for borrower-paid (BPMI) and those lender-paid MI (LPMI) programs which Essent underwrites using a consumer report it obtains directly from a consumer reporting agency, provided that the lender provides disclosures to the consumer regarding LPMI and passes on the cost of mortgage insurance to the consumer.

HOW DOES ESSENT OBTAIN CREDIT REPORTS?

Under the FCRA, consumer reporting agencies may provide credit reports to certain persons, including creditors and insurers in connection with requests for credit or insurance. When Essent underwrites MI requested in connection with a mortgage loan application, we are permitted under the FCRA to obtain and review the borrower’s credit report.

CAN THE PRICE OF MY MI INCREASE AFTER MY LOAN IS CLOSED?

No. The price that Essent charges for MI on your mortgage loan does not and will not change. A Notice of Adverse Action only explains how the price we are charging was impacted by your credit score or credit information.

WHAT IF THERE IS INCORRECT OR INCOMPLETE INFORMATION IN MY CREDIT REPORT?

Correcting erroneous information in your credit file is important and may improve the terms of credit and insurance offered to you in the future; however, your MI is effective when your loan is closed.

For information on how to correct information in your credit file, see “How to Dispute Credit Report Errors” under “For Consumers” and “Credit Report” at the U.S Federal Trade Commission's website.

WHO CAN I CONTACT IF I HAVE MORE QUESTIONS?

For questions related to your loan status, you should contact your lender directly. For questions about Essent, Notices of Adverse Action, or MI in general, please contact us at compliance@essent.us.