3.18 Fair Credit Reporting Act (FCRA) - Regulation V - Details

Fair Credit Reporting Act (FCRA) - Regulation V - was enacted to ensure the accuracy, fairness and privacy of consumers' personal information used by consumer reporting agencies (CRA).

- FCRA is a federal law dealing with the granting of credit, access to credit information, the rights of debtors, and the responsibilities of creditors. - A creditor is defined as "a person who regularly extends consumer credit that is subject to a finance charge or is paid by written agreement in more than four installments, and to whom the obligation is originallypayable". - The three CRAs are: Equifax, Transunion and Experian. - Requires credit reporting agencies to verify information that is under dispute and limits how long negative information can remain on a credit report.

FCRA

- Must limit access to a credit file to ONLY those with legitimate business need. - May not give out consumer credit information to an employer, or a potential employer, without written consent. - If a MLO is running a credit report and sees a fraud alert, he must contact the person whose name is on the account at the number provided to the credit bureau, or take other reasonable steps to ensure that the person applying for a mortgage loan is not really an identity thief. - The minimum timeframe that a consumer reporting agency must include a fraud alert in a consumer's file is one year. - Adverse Action Notice - (in writing) - any entity that uses a credit report to deny an application for credit, insurance or employment (adverse action) must provide the consumer with the name, address and toll-free phone number of the reporting credit bureau. • Example: "We denied you, we used Equifax - here is their name, address and telephone number." • The requirements under the FCRA differ somewhat from those under the Equal Credit Opportunity Act, although both laws can be satisfied with a single adverse action notice. Note: you as an MLO cannot provide this report, as you are not a credit reporting agency.

FCRA provides for the following rights:

• Right to request a copy of Credit File/Report. • Right to Request his/her credit Score - individuals may also request their credit score from the credit bureaus, but the credit score is not free! • Right to Dispute Negative or inaccurate information - the consumer reporting agency must correct or delete inaccurate, incomplete, or unverifiable information within 30 days of receipt of the dispute. • Right to limit prescreened offers - Reg V gives consumers the right to limit "prescreened" offers of credit and insurance based on information in their credit report. • Negative credit information of more than seven (7) years must be deleted (late payments, foreclosures, collections, tax liens). • Bankruptcies, judgments or other public records no more than ten (10) years must be deleted. Chapter 7 provides for complete liquidation of the debtor's debts while Chapter 13 provides for the debtor to pay back their creditors through a payment plan decided by thecourt. • Unpaid federal tax liens may be retained on credit reports forever. • Criminal convictions also remain forever (if the State reports this information).