source:
  type: regulation
  id: reg-b-1002.2
  authority: 12 CFR §1002.2 — Definitions (Regulation B)
  description: 12 CFR §1002.2 — Definitions.
  coverage_tier: context
obligations:
- id: reg-b-1002.2-full
  canonical_id: reg-b-1002.2-full
  section: 12 CFR §1002.2 — Definitions
  type: reference
  tags:
  - regulator-direct
  - ecoa
  - corpus-expansion
  - tier-context
  primary_source:
    tier: 1
    authority: 12 CFR §1002.2 — Definitions
    source_class: cfpb-regulation
    source_url: https://www.law.cornell.edu/cfr/text/12/1002.2
    snapshot_id: 9fb277af677ef927
    fetched_at: '2026-06-17T17:54:38Z'
    content_hash: sha256:cca895382ceccff99d88290fbba6f26a743963fcd7b690d3b8f8d5082f33c4b3
    paragraph_quote: '§ 1002.2 Definitions. For the purposes of this part, unless
      the context indicates otherwise or as otherwise defined in subpart B, the following
      definitions apply: (a) Account means an extension of credit . When employed
      in relation to an account , the word use refers only to open-end credit . (b)
      Act means the Equal Credit Opportunity Act (Title VII of the Consumer Credit
      Protection Act ). (c) Adverse action. (1) The term means: (i) A refusal to grant
      credit in substantially the amount or on substantially the terms requested in
      an application unless the creditor makes a counteroffer (to grant credit in
      a different amount or on other terms) and the applicant uses or expressly accepts
      the credit offered; (ii) A termination of an account or an unfavorable change
      in the terms of an account that does not affect all or substantially all of
      a class of the creditor ''s accounts; or (iii) A refusal to increase the amount
      of credit available to an applicant who has made an application for an increase.
      (2) The term does not include: (i) A change in the terms of an account expressly
      agreed to by an applicant ; (ii) Any action or forbearance relating to an account
      taken in connection with inactivity, default, or delinquency as to that account
      ; (iii) A refusal or failure to authorize an account transaction at point of
      sale or loan, except when the refusal is a termination or an unfavorable change
      in the terms of an account that does not affect all or substantially all of
      a class of the creditor ''s accounts, or when the refusal is a denial of an
      application for an increase in the amount of credit available under the account
      ; (iv) A refusal to extend credit because applicable law prohibits the creditor
      from extending the credit requested; or (v) A refusal to extend credit because
      the creditor does not offer the type of credit or credit plan requested. (3)
      An action that falls within the definition of both paragraphs (c)(1) and (c)(2)
      of this section is governed by paragraph (c)(2) of this section. (d) Age refers
      only to the age of natural persons and means the number of fully elapsed years
      from the date of an applicant ''s birth. (e) Applicant means any person who
      requests or who has received an extension of credit from a creditor , and includes
      any person who is or may become contractually liable regarding an extension
      of credit . For purposes of § 1002.7(d) , the term includes guarantors, sureties,
      endorsers, and similar parties. (f) Application means an oral or written request
      for an extension of credit that is made in accordance with procedures used by
      a creditor for the type of credit requested. The term application does not include
      the use of an account or line of credit to obtain an amount of credit that is
      within a previously established credit limit. A completed application means
      an application in connection with which a creditor has received all the information
      that the creditor regularly obtains and considers in evaluating applications
      for the amount and type of credit requested (including, but not limited to,
      credit reports, any additional information requested from the applicant , and
      any approvals or reports by governmental agencies or other persons that are
      necessary to guarantee, insure, or provide security for the credit or collateral).
      The creditor shall exercise reasonable diligence in obtaining such information.
      (g) Business credit refers to extensions of credit primarily for business or
      commercial (including agricultural) purposes, but excluding extensions of credit
      of the types described in § 1002.3(a) -(d). (h) Consumer credit means credit
      extended to a natural person primarily for personal, family , or household purposes.
      (i) Contractually liable means expressly obligated to repay all debts arising
      on an account by reason of an agreement to that effect. (j) Credit means the
      right granted by a creditor to an applicant to defer payment of a debt , incur
      debt and defer its payment, or purchase property or services and defer payment
      therefor. (k) Credit card means any card, plate, coupon book, or other single
      credit device that may be used from time to time to obtain money, property,
      or services on credit . (l) Creditor means a person who, in the ordinary course
      of business , regularly participates in a credit decision, including setting
      the terms of the credit . The term creditor includes a creditor ''s assignee,
      transferee, or subrogee who so participates. For purposes of §§ 1002.4(a) and
      (b) , the term creditor also includes a person who, in the ordinary course of
      business , regularly refers applicants or prospective applicants to creditors
      , or selects or offers to select creditors to whom requests for credit may be
      made. A person is not a creditor regarding any violation of the Act or this
      part committed by another creditor unless the person knew or had reasonable
      notice of the act , policy, or practice that constituted the violation before
      becoming involved in the credit transaction . The term does not include a person
      whose only participation in a credit transaction involves honoring a credit
      card . (m) Credit transaction means every aspect of an applicant ''s dealings
      with a creditor regarding an application for credit or an existing extension
      of credit (including, but not limited to, information requirements; investigation
      procedures; standards of creditworthiness; terms of credit ; furnishing of credit
      information; revocation, alteration, or termination of credit ; and collection
      procedures). (n) Discriminate against an applicant means to treat an applicant
      less favorably than other applicants. (o) Elderly means age 62 or older. (p)
      Empirically derived and other credit scoring systems —(1) A credit scoring system
      is a system that evaluates an applicant ''s creditworthiness mechanically, based
      on key attributes of the applicant and aspects of the transaction, and that
      determines, alone or in conjunction with an evaluation of additional information
      about the applicant , whether an applicant is deemed creditworthy. To qualify
      as an empirically derived, demonstrably and statistically sound, credit scoring
      system, the system must be: (i) Based on data that are derived from an empirical
      comparison of sample groups or the population of creditworthy and non-creditworthy
      applicants who applied for credit within a reasonable preceding period of time;
      (ii) Developed for the purpose of evaluating the creditworthiness of applicants
      with respect to the legitimate business interests of the creditor utilizing
      the system (including, but not limited to, minimizing bad debt losses and operating
      expenses in accordance with the creditor ''s business judgment); (iii) Developed
      and validated using accepted statistical principles and methodology; and (iv)
      Periodically revalidated by the use of appropriate statistical principles and
      methodology and adjusted as necessary to maintain predictive ability. (2) A
      creditor may use an empirically derived, demonstrably and statistically sound,
      credit scoring system obtained from another person or may obtain credit experience
      from which to develop such a system. Any such system must satisfy the criteria
      set forth in paragraph (p)(1)(i) through (iv) of this section; if the creditor
      is unable during the development process to validate the system based on its
      own credit experience in accordance with paragraph (p)(1) of this section, the
      system must be validated when sufficient credit experience becomes available.
      A system that fails this validity test is no longer an empirically derived,
      demonstrably and statistically sound, credit scoring system for that creditor
      . (q) Extend credit and extension of credit mean the granting of credit in any
      form (including, but not limited to, credit granted in addition to any existing
      credit or credit limit; credit granted pursuant to an open-end credit plan;
      the refinancing or other renewal of credit , including the issuance of a new
      credit card in place of an expiring credit card or in substitution for an existing
      credit card ; the consolidation of two or more obligations; or the continuance
      of existing credit without any special effort to collect at or after maturity).
      (r) Good faith means honesty in fact in the conduct or transaction. (s) Inadvertent
      error means a mechanical, electronic, or clerical error that a creditor demonstrates
      was not intentional and occurred notwithstanding the maintenance of procedures
      reasonably adapted to avoid such errors. (t) Judgmental system of evaluating
      applicants means any system for evaluating the creditworthiness of an applicant
      other than an empirically derived, demonstrably and statistically sound, credit
      scoring system. (u) Marital status means the state of being unmarried, married,
      or separated, as defined by applicable state law. The term “unmarried” includes
      persons who are single, divorced, or widowed. (v) Negative factor or value,
      in relation to the age of elderly applicants , means utilizing a factor, value,
      or weight that is less favorable regarding elderly applicants than the creditor
      ''s experience warrants or is less favorable than the factor, value, or weight
      assigned to the class of applicants that are not classified as elderly and are
      most favored by a creditor on the basis of age. (w) Open-end credit means credit
      extended under a plan in which a creditor may permit an applicant to make purchases
      or obtain loans from time to time directly from the creditor or indirectly by
      use of a credit card , check , or other device. (x) Person means a natural person
      , corporation, government or governmental subdivision or agency , trust, estate,
      partnership, cooperative, or association. (y) Pertinent element of creditworthiness,
      in relation to a judgmental system of evaluating applicants , means any information
      about applicants that a creditor obtains and considers and that has a demonstrable
      relationship to a determination of creditworthiness. (z) Prohibited basis means
      race, color, religion, national origin, sex, marital status , or age (provided
      that the applicant has the capacity to enter into a binding contract); the fact
      that all or part of the applicant ''s income derives from any public assistance
      program ; or the fact that the applicant has in good faith exercised any right
      under the Consumer Credit Protection Act or any state law upon which an exemption
      has been granted by the Bureau. (aa) State means any state , the District of
      Columbia, the Commonwealth of Puerto Rico , or any territory or possession of
      the United States. [ 76 FR 79445 , Dec. 21, 2011, as amended at 88 FR 35527
      , May 31, 2023]'
  judgment: false
