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The FCRA was created with the goal of establishing controls on the fairness and accuracy of credit reporting. Initially, the regulation pertained mainly to Credit Reporting Agencies (CRAs), but has since been expanded to encompass users of credit data. For LoanPro, this means lenders and furnishers of consumer reports. The FCRA also requires financial institutions (the definition includes lenders) to provide various notices and disclosures to consumers.

This article provides a quick overview of the Fair Credit Reporting Act (FCRA), complete with links to our detailed explanations of specific requirements. It also outlines how LoanPro can help you stay FCRA compliant.

FCRA requirements

  • Lenders can obtain consumer reports only for purposes allowed by the FCRA.
  • There are limits on the information lenders can share, and who they can share information with. If financial institutions don’t abide by these limitations, they may be defined as a CRA,  subjecting them to more restrictions.
  • A lender can only use consumer information for marketing purposes if the consumer in question has been presented with an opt-out notice and did not opt-out.
  • If a creditor extends credit that is less favorable than the terms extended to other consumers, the creditor has to provide a risk-based pricing notice.
  • Lenders need to provide disclosures for adverse actions taken and negative information reported to Credit Reporting Agencies (CRAs). For mortgages, they must also disclose the borrower’s credit score
  • If a lender furnishes information to a CRA, they have specific responsibilities to uphold, and must conduct an investigation if the information is disputed.
  • The FCRA regulates how lenders should handle alerts for fraud and active duty military that appear in a consumer report.

LoanPro solutions

  • Customizable disclosure forms: We offer forms that adhere to the FCRA’s safe harbor templates, allowing for tailored disclosures and notices.
  • Credit score record: Our LMS provides a place to record credit scores and lets you use them as variables in custom forms and notifications for those required to disclose them.
  • Automated communications: Use our configurable, rule-based automations to help you comply with FCRA notification requirements.
  • Out-of-the-box workflows: Use our pre-built workflows to simplify processes that will keep you compliant with FCRA. These workflows can be configured to meet your specific needs.
    • SCRA compliance: Verify SCRA qualification and retrieve documents from the DoD database with ease. 
    • Credit dispute management: Manage credit disputes quickly and seamlessly when disputes are received. 
    • Fraud alert system: Stay on top of fraudulent activity by setting up alerts to promptly notify your fraud team.  

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Spencer McWilliams

Product Marketing Specialist