Module 3

Credit Score

A numerical value derived from a statistical tool used as a part of the determination as to a consumer's likelihood of certain credit behaviors. The credit score is also referred to as a risk predictor or risk score.

Red Flag

A pattern, practice, or specific activity that indicates the possible existence of identity theft.

The Customer _________ Program (CIP) sets a minimum standard for identifying information from customers opening an account.

Identification

One of the things FACTA did was establish a national __________ alert system.

Fraud

An active duty on a credit report gives public notice that the consumer is active in the __________.

Military

Which TWO statements are accurate regarding the timing of credit-related items in a consumer report? a) Bankruptcy records are reported for a period of seven years. b) A civil judgment is reported for seven years c) Charged off accounts are reported for a period of ten years. d) Derogatory credit except bankruptcy is reported for seven years.

(B,D)

Question 3: A privacy notice must includs all of the following EXCEPT: *Be a clear, conspicuous and accurate statement of the company's privacy practices *Include what information the company collects about its customers and/or consumers, and with whom it shares information *Explain how it protects and safeguards the information *Indicate that the policy is a vehicle to protect public information

*Indicate that the policy is a vehicle to protect public information

What's included in a typical credit report?

1. Personal identifying information (current and past addresses, phone numbers, SSN) 2. Loan Account information from each credit bureau (types of accounts, creditors) 3. Inquiries 4. Public record data (liens, bankruptcies, foreclosures)

Fair Credit Reporting Act Objectives:

1. Prevent the misuse of sensitive information by limiting the access to recipients who have a legitimate need 2. Improve the accuracy and integrity of credit reports 3. Promote the efficiency of the nation's banking and consumer credit systems

Credit scores range from

300-850

What is the highest credit score?

850

Lenders will underwrite a file with any of these credit reports EXCEPT: a) Single-bureau credit report b) Residential mortgage credit report c) Two bureau credit reports

A

Active Duty Alert

A notification in a consumer's credit file to alert the user of a credit report that the consumer is active in the military and most likely deployed. Is part of the Red Flag Identity Theft program.

Question 1: What is the Safeguard Rule?

A rule issue by the FTC that requires companies to have measures to keep customer information safe

One of the things the BSA requires financial institutions to file are suspicious ________ reports. ("SARs")

Activity

Does the lender need to get special permission to get a credit report?

An application by the consumer for credit gives rise to a permissible purpose to obtain consumer report, regardless of the form.

Consumer Report/Credit Report

Any written or oral or other form of communication of any information from a consumer reporting agency bearing on a consumer's creditworthiness, credit standing, credit capacity, character, and general reputation which is used, or expected to be used, as part of a decision to extend credit.

The Bank Secrecy Act requires lenders to file a report if they receive _______ transactions exceeding $10,000.

Cash

The Fair Credit Reporting Act (FCRA) regulates consumer reporting agencies. The law is Title 6 of the ______ ______ ______ ______. It limits bankruptcies to _____ years and other derogatory credit for _____ years.

Consumer Credit Protection Act, 10, 7

FINCEN stands for the Financial _______ Enforcement Network.

Crimes

FACTA requires companies to have secure procedures to get rid of consumer reports. called "The __________ Rule" (e.g., shredding documents).

Disposal

What is FACTA?

Fair and Accurate Credit Transaction Act; it established a fraud alert system, required companies to hide credit card numbers, and set up secure information disposal procedures.

The following identifying information is not required for the Customer Identification Program (CIP). Address, Gender, Name, Date of Birth

Gender

A consumer reporting agency that receives a verified call indicating fraud against a consumer they maintain a file on must include a fraud alert in the file for ____ year beginning on the date of request.

One

Consumer Reporting Agency

Regularly engages in the practice of assemb1 or evaluating and maintaining for the purpose of furnishing consumer reports to third parties

Which component of a FICO credit score has the greatest impact on the score?

Payment history makes up about 35% of the FICO score. It carries the most weight.

Financial institutions must develop a written program that identifies and detects the relevant warning signs of identity theft. These are also called _______

Red Flags

A credit report that combines the 3 CRAs and has supplemental data such as paid-off accounts or employment verification is known as:

Residential Mortgage Credit Report

What can applicants with NO credit score provide to lenders to demonstrate their payment history?

Use alternative credit like utilities and insurance

Customer

consumer with a continuing relationship with a financial institution.

The PATRIOT Act is designed to protect against ________, money laundering, and international threats.

financing of terrorism

The Bank Secrecy Act addresses money ________

laundering

Consumer

refers to an individual who obtains or has obtained a financial product or service from a financial institution for personal, family, or household reasons.