Military Lending Act (MLA) Covered Borrower Status

Indicator of MLA covered borrower status

Product Overview

Know your borrower -- Since October 3, 2016, creditors are required to verify covered borrower status prior to originating or closing certain credit products (and retain the verification for five years). Beginning October 3, 2017, credit cards will also fall under MLA regulation.  Those in violation of the rule could face steep penalties.  MLA Covered Borrower Status helps lenders by providing an indicator of covered borrower status either in a separate segment delivered with a consumer credit report or as a standalone report without a credit report.

In 2006, Congress passed the Military Lending Act (MLA) to help protect active duty service members and their dependents from predatory lending. In 2015, the Department of Defense (DOD) issued a final rule amending the MLA to cover a wider range of credit products impacting traditional creditors like banks and credit unions. The DoD’s Final Rule expanded the scope of the MLA to include the majority of closed or open-ended loans, excluding real estate secured transactions, certain purchase money auto transactions and personal property transactions.

Placing tighter restrictions on creditors lending to active military personnel, an amendment to the rule shifts the burden of proof of covered borrower status to the creditor.  Lenders need to identify if the consumer is covered by MLA protections at the point of application but at a minimum, prior to origination in order to be extended safe harbor and adjust contract and product terms to comply with MLA restrictions and limitations.

Contact your account manager or call us today to learn more about MLA Covered Borrower Status.

More information about the Military Lending Act Final Rule can be found at