Fair Credit Reporting Act Flashcards
FCRA
Credit unions must have a “permissible purpose” to obtain a consumer report. What are the permissible purposes?
PERMISSIBLE PURPOSES: 7 (obtaining a consumer report)
› Written instructions of the consumer
› Extending, reviewing and collecting credit
› Employment purposes
› Insurance underwriting
› Valuation/assessment of the credit or prepayment risks associated with an EXISTING credit obligation
› Business transaction that the consumer initiates
› Consumer continues to meet the terms
FCRA
What must a credit union do in order to obtain and use a prescreened list? Under what circumstances may a credit union refuse to grant credit to someone on the list?
The credit union must maintain the criteria used for the product (including the criteria used to generate the prescreened report and any other criteria such as collateral requirements) on file for a period of 3 years, beginning on the date that the credit union made the offer to the member.
- Credit unions must make a “firm offer of credit or insurance” to each person on the list
- Not required to grant credit if the credit union established a requirement for collateral before obtaining the list, the collateral requirement is disclosed in the offer and the member cannot furnish the required collateral
- If the member no longer meets the creditworthiness criteria, the credit union does not have to grant the loan
- The report user establishes pre‐determined criteria for consumers who qualify for an offer.
- The CRA produces a list of individuals that meet the criteria, and each name in the list is a consumer report.
- The user must make an unconditional “firm offer of credit” to everyone on the list; but it can require collateral and continuing qualification under the criteria.
- Prescreen notices and opt out must be provided.
FCRA
When is a risk-based pricing notice required and how is it different from an adverse action notice?
Risk-based Pricing Notice:
- Required when the user, based on a consumer report, extends credit to the consumer on terms that are “materially less favorable”
FCRA Adverse Action:
- Denial or revocation of credit
- Change in the terms of an existing credit arrangement
- Refusal to grant credit in substantially the same amount
or on terms substantially similar to those requested
- Application made by or transaction initiated by any member
- Account review to determine whether the member continues to meet the terms of the account
› Adverse to the interests of the member
FCRA
What must be included in the risk-based pricing notice? Are there any exceptions to the risk-based pricing notice requirement?
Risk-Based Pricing Notice must disclose:
› Terms offered based on info from a consumer report
› Credit score used in making the decision
› The RANGE of possible scores under the model used
› Key factors ADVERSELY affecting member’s credit score
› Date credit score was created
› The name of the person/entity that provided the score, and contact information
› A statement that the member can obtain a copy of the consumer report without charge
EXCEPTIONS:
- If the consumer applies for specific material terms and is granted those terms
- Member receives an adverse action notice
- Prescreened solicitations
- Loans secured by residential real property–credit score disclosure
FCRA
What must a credit union do when it receives a direct dispute from a member?
› Conduct a reasonable investigation with respect to the disputed information
› Review all relevant information provided by the member with the dispute
› Complete its investigation of the dispute and report the results of the investigation to the member within 30 days, with a possible 15-day extension
› Promptly notify each consumer reporting agency and provide any correction to make disputed information accurate
FCRA
When is a negative information notice required?
- BEFORE it provides negative information to a nationwide consumer reporting agency
- Within 30 days AFTER reporting the negative information
