Fair Credit Reporting Act Overview

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Questions and Answers

What must a creditor disclose to a consumer when their credit score is used to determine credit terms?

A list of previous creditors of the consumer

The credit score range and identification of the score model used (correct)

The credit history of any other consumers

The reason for the credit score determination

Which act granted rule-making authority under FCRA to the CFPB?

Dodd-Frank Wall Street Reform and Consumer Protection Act (correct)

Equal Credit Opportunity Act

Consumer Reporting Modernization Act

Fair and Accurate Credit Transactions Act

What additional disclosures are required if adverse action is taken based on a consumer report?

A statement about the consumer reporting agency's involvement (correct)

Details of the consumer's previous loans

The lender's profit margin

An explanation of credit scores

What is one of the requirements placed on lenders when they use prescreened consumer reports?

Provide an opt-out notice Signup and view all the answers

What can a consumer do to address potential identity theft according to the FCRA?

Add a fraud alert notification to their credit report Signup and view all the answers

When did the Fair Credit Reporting Act (FCRA) become effective?

April 25, 1971 Signup and view all the answers

Which of the following is NOT a requirement for creditors when providing a credit score to consumers?

The consumer's entire credit report Signup and view all the answers

What is a primary factor that influences a consumer's credit score?

Use of credit and credit history Signup and view all the answers

What is the duration of a temporary or initial fraud alert?

90 days Signup and view all the answers

Which type of fraud alert is specifically designed for active-duty military members?

Active-duty fraud alert Signup and view all the answers

What must a consumer submit to place an extended fraud victim alert?

Identity theft report Signup and view all the answers

Which of the following is required to be included in a credit report?

Bankruptcy information Signup and view all the answers

Who is considered a creditor under the definitions provided?

Someone who regularly extends or renews credit Signup and view all the answers

What is the permissible purpose for which a credit bureau may provide consumer credit report information?

To consider extending credit Signup and view all the answers

Which of the following is not required to be excluded from a credit report?

Criminal convictions older than 7 years Signup and view all the answers

What is a 'Red Flag' in the context of identity theft?

An indicator of potential identity theft Signup and view all the answers

Which agency retained rule-making authority for identity theft rules under the Red Flag rules?

Federal Trade Commission Signup and view all the answers

Covered accounts are defined as accounts that primarily serve what purpose?

Personal, family, or household needs Signup and view all the answers

What is one of the primary responsibilities of a financial institution under the Red Flag rules?

To develop a written Identity Theft Prevention Program Signup and view all the answers

Which of the following is a category of red flags to consider for identity theft detection?

Notices from law enforcement about identity theft Signup and view all the answers

What can a consumer do if they detect an error in their credit report?

Indicate their dispute with the bureau Signup and view all the answers

Study Notes

Fair Credit Reporting Act (FCRA) and Amendments

FCRA became effective in 1971, significantly amended by the 2003 FACT Act.
The 2010 Dodd-Frank Act gave the CFPB rule-making authority (with exceptions) under FCRA.
12 CFR Part 1022 (76 Fed. Reg. 79308) restated FCRA regulations in 2011 under CFPB authority.

Consumer Disclosure Requirements

Creditors must disclose credit scores to consumers if used in credit decisions.
Disclosure must include: Explanation of credit score, how it impacts terms, how scores are calculated, the specific score used, possible score ranges, factors affecting the score, date of score creation, and the credit reporting agency.
Additional disclosures for adverse actions: Oral, written, or electronic notice, consumer reporting agency details, statement that the agency did not make the decision, consumer's rights to a free report and dispute options.
Opt-out notice required when lenders use pre-screened consumer reports.

Identity Theft Provisions

Consumers can add a free fraud alert to their credit report.
Alerts automatically apply to all three major bureaus.
Alerts instruct recipients to verify identity before processing applications.
Three types of fraud alerts: Temporary/Initial (90 days/1 year, renewable), Active-duty (1 year, unless removed), Extended Fraud Victim (7 years).
For extended fraud victim alert, a copy of law enforcement identity theft report is needed.

Rights to Free Annual Consumer Reports

Provisions for increased access to consumer reports for improved accuracy.
Dodd-Frank Act mandates disclosure of credit scores and related information if used in adverse action or risk-based pricing.

Parties Covered by FCRA/FACTA

Procurers and users of credit information (e.g., creditors, purchasers of dealer paper).
"Creditor" includes anyone regularly extending/renewing credit, arrangers of credit, or assignees.
Furnishers and transmitters of information to consumer reporting agencies.
Marketers of credit/insurance products; Employers.

Contents of Credit Reports

Required: Bankruptcy information, adverse credit score factors, account closure indications, consumer dispute information, full credit card numbers, address discrepancies.
Excluded: Bankruptcies >10 years old, civil suits/judgments/arrest records/tax liens/collections >7 years old (some exceptions for statutes of limitations), medical information (some restrictions), criminal convictions >7 years old.

Permissible Purposes for Credit Reports

Responding to court orders.
Consumer written instructions.
Party requests for credit extension, employment, insurance underwriting, licensing, valuation/risk assessment of credit obligations based on legitimate business need, consumer-initiated business transactions, account review to assess continued account eligibility.
Government authority (e.g., government-sponsored travel charge cards, child support enforcement, failed bank liquidation).

Federal Trade Commission (FTC) Authority

FTC retained rule-making/enforcement authority for identity theft via "Red Flag" rules (16 CFR Part 681).

Covered Accounts & Red Flags

"Covered account" defined as accounts primarily for personal/family use, requiring multiple transactions, or those reasonably foreseeing identity theft risk.
"Red flag" is a pattern/practice/activity indicating possible identity theft (alerts, suspicious documents, identity information, unusual account activity, notifications from customers/victims/law enforcement).

Identity Theft Prevention Program

Financial institutions/creditors with covered accounts must develop and implement a written Identity Theft Prevention Program.
Program must be appropriate to institution size, complexity, and operational scope to detect, prevent, and mitigate identity theft losses.

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Description

This quiz covers the Fair Credit Reporting Act (FCRA) and its amendments, including key provisions regarding consumer disclosures and identity theft protections. Test your knowledge on the history of FCRA, the role of the CFPB, and the requirements placed on creditors when dealing with credit scores. Understand how these regulations affect consumers' rights and protections in the credit reporting process.