Fair Credit Disclosure Requirements
Fair Credit Reporting Act
If an lender or insurer uses a report from a consumer-reporting agency, that lender or insurer must comply with a state law relating to use and disclosure of credit and/or insurance information, as well as the federal Fair Credit Reporting Act. The Fair Credit Reporting Act is a federal law that regulates consumer reporting agencies and the use of consumer reports and investigative consumer reports provided by such agencies. The goal of the law is to help assure that credit reporting is accurate and current. The applicant must be notified in advance that a consumer report may be obtained by the insurer.
A consumer report is a credit report. It relates to a person’s credit, character, reputation or habits. It is used to determine whether a person is eligible for insurance, a loan, a job,
etc.
An investigative consumer report is a detailed report from a consumer-reporting agency
that involves interviews with the applicant’s neighbors or acquaintances about his
lifestyle, character, and reputation. When a lender or insurer uses such a report in connection
with an loan or insurance application, it must notify the applicant within three business days in
writing, explaining:
- A report was requested.
- What it will cover.
- the fact that the applicant has a right to request certain information about the report from the insurer.
- A comprehensive review of the Fair Credit Reporting Act can be review at The Federal Trade Commission which is a government agency aiming to protect consumers' rights.
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