In 1968, several laws were implemented to protect consumer privacy and one of them was the Fair Credit Reporting Act. The purpose of FCRA, also known as Regulation V, is to regulate the collection, dissemination, and use of consumer information. This law formed the base of credit rights for the consumer and until recently was enforced by the Federal Trade Commission. However, today with the implementation of Dodd-Frank Wall Street Reform Act, almost all of the mortgage related laws transferred enforcement to the Consumer Financial Protection Bureau (CFPB). The Fair Credit Reporting Act was one of the laws transferred to the newly created bureau.
The Fair Credit Reporting Act states that a Loan Originator is not to give the consumer a copy of the credit report. This is one of the biggest misconceptions in the mortgage industry. Often, a LO thinks that the borrower is entitled to a copy of the credit report especially if they paid for it. This is only partially true. As a MLO your job is to give the borrower the name, address and phone number of the consumer reporting agency aka Equifax, Transunion, or Experian in the event of adverse action.
The credit report has a lot personally identifying information on it and if it were to fall into the wrong hands, like that of an identity thief, a lot of damage could be done. Therefore, you as the online casino Loan Originator should not give the borrower an actual copy of their credit but instead should give the contact information for the three national credit reporting agencies.
A consumer is entitled to a free copy of their credit report once a year and if:
- A credit application was denied because of something on the credit report.
- The consumer’s identity had been stolen or a fraud alert had been added to their profile.
- The credit report is erroneous do to fraud.
- The consumer is on public assistance or is unemployed.
A credit score is not required to be included on the credit report when a consumer requests a copy. However, a credit score can be included for an additional fee. The Dodd-Frank Wall Street Reform and Consumer Protection Act does require that the consumer receive either a written or electronic disclosure of the credit score that was used when adverse action was taken.
Under the FCRA a consumer is allowed to dispute any inaccurate or incomplete information that is reflected on their credit report as well as limit any “prescreened” offers. A prescreened offer is an unsolicited offer by a creditor that the borrower did not ask for or inquire about. Those offers must have a toll-free number so that one can be removed from the list.
An important benefit of Reg V is that outdated negative credit information can only remain on a credit report for 7 years. A bankruptcy can remain for 10 years while a criminal conviction can remain indefinitely. Good credit also has no limit as to how long it can remain on a credit report.
In order for one to pull a credit report, the consumer must give consent and the person pulling the report must have a legitimate business need. A legitimate need is typically when a party is considering an application with a creditor, insurer, employee, landlord or other business. When giving information to an employer or potential employer written consent is required.
As you can see there are many benefits to the Fair Credit Reporting Act including giving consumers access to their credit information and limiting others access to it. We hope that this has helped you understand the details under the FCRA. If you are ever in doubt of what you can or cannot do it’s always a good idea to obtain legal assistance. You can also refer to the CFPB’s blog at
http://www.consumerfinance.gov/blog/category/fair-credit-reporting-act/. There you can also ask questions and get answers about your specific situation.
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