Consumer Lending Regs- Fair Credit Reporting Act Flashcards
To promote the accuracy, fairness and privacy of consumer information contained in the files of consumer reporting agencies
To protect consumers from the willful and or negligent inclusion of inaccurate information in their credit reports
To regulate the collection, dissemination and use of consumer information including consumer credit information
These are what?
The purpose of fair credit reporting act
What regulation is fair credit reporting act?
Regulation V
Who has general rule making authority for FCRA?
CFPB but Ncua and ftc also have some authority
Obtaining credit reports under false pretenses or knowingly without permission can result in a fine up to?
$1000.00
What are the 3 key areas of CFPB action?
Fixing data accuracy at credit reporting agencies
Repairing broken dispute processes at credit reporting agencies
And cleaning up information from data furnishers
What are permissible purposes to pull a credit report?
Court order or federal subpoena
Consumer written instructions
Credit transactions
Employment purposes
Underwriting insurance
Business transaction initiated by consumer
Review of existing accounts
Prescreened offers of credit
What are the 4 common permissible purposes our credit unions might access a credit report?
Credit transactions
Employment purposes
Prescreened offers and
Review of existing accounts
This is required when furnishing negative information to a credit reporting agency
Negative information notice
What are the two options for negative information notice
Provide notice to member before furnishing information to a credit reporting agency
Or provide notice to member within 30 days after furnishing the information to credit reporting agencies
True or false you are required to send a notice to home loan applicants when you use a credit score in connection with mortgage loan applications?
True
What information must the notice go home loan applicant have on it?
Consumers credit score
Range of possible scores
Date consumers score was created
Key factors influencing the score
What is Prescreening?
The process by which a credit reporting agency either compiles or edits a list of consumers who meet specific credit criteria and then provides that list directly to a creditor, or to 3rd party who sells the list to a creditor
What are the pre screening rules?
Required to provide notice when members are offered credit based on prescreened list
Members must be able to opt out of pre screening
Must retain prescreeb criteria for 3 years
If you make a offer of credit to members who pass the pre screening process the offer does not have to be unconditional… meaning you can still require verification of income etc
There are 2 types of opt out options what are they?
Short and long form
What are the requirements for pre screen and opt out short?
Must be prominent, clear and conspicuous
Font must be larger than the rest of the text
Must be located on the front side of the first page of the promotional document
Must be distinct from other text in a type from principle type like inside a border
What are the requirements for the long version of pre screen and opt out?
Clear and conspicuous
No smaller than principal text
Begin with the heading PRESCREEN AND OPT OUT
Type style distinct from principal such as bold underlines etc
Set apart from other text on page
What is risk based pricing?
Modifying interest rate based on a credit score
Creditor uses consumer report in connection with application or extension of credit and
Based on that report grants or extends credit to consumer on terms that are less favorable than the most favorable terms
This is an example of?
When you must provide risk based pricing notice
Can you provide a risk based pricing notice to everyone?
Yes because it is easier
When do you have to provide a adverse action form?
Denial or revocation of credit
Change in terms of existing credit arrangement
Refusal to grant credit on requested terms
What are permissible uses for consumer reports under the FCRA?
Determining an applicants eligibility for credit, insurance or to open an account
In response to a court order
Prescreening a list of members for credit services
In accordance to a written request from a member
When information obtained from a credit bureau has any bearing on a credit decision what must be disclosed to the member?
That info from a credit bureau was used in the credit decision
Name, address, telephone number of the credit bureau
Statement that the credit bureau did not make the decision
Notice of members right to Receive a free copy of report within 60 days
Notice of rights for member to dispute with bureau
Under what circumstances would your credit Union become a consumer reporting agency?
If you report to others the information that you gathered from sources other than through your own experience with member
What is the duty of the credit Union upon discovering that incorrect information was reported to the consumer reporting agency
Credit Union must provide the complete and accurate information to the credit reporting agency and notify each credit reporting agency to whom the incorrect info was given
Under what circumstances can you obtain and use medical information
If the information relates to debts, expenses, income, benefits, assets, collateral or the loan purpose including the use of loan proceeds…
Example loan proceeds are being used to pay medical expenses such as a surgery
Can you take medical conditions into account when making Credit eligibility decisions?
No
Report accurate information
Update information as necessary
If disputed by member notify credit reporting agency or correct the information
If notified of dispute by credit reporting agency conduct investigation within 30 days
Report voluntary credit account closings
Report dates of delinquencies
These are examples of a credit unions______ under the fair credit reporting act
Obligations
What is the initial fraud alert period for members credit reports?
90 days
True or false alerts can be extended to 7 years?
True
What is the active duty alert period?
12 months
True or false during alert period creditors can not extend new credit unless safeguards are in place to verify the identity of the consumer by contacting the consumer by methods specified
True
Reasonable policies and procedures
Staff training
Oversight of service providers
Oversight by board of directors or committee
These are required components if your credit unions_____
Identity theft protection program
A written risk based program designed to detect prevent and mitigate identity theft when opening accounts or for existing accounts is called the?
Red flag program
For the red flag program you have to have policies and procedures to:
Identify red flags/ incorporate them in program
Detect incorporated red flags
Respond to red flags to prevent and mitigate identity theft
Update the program periodically
