Fair credit Reporting Act: Top rules for lenders and Servicers
Lenders collect so much information from consumers every day. The Fair Credit Reporting Act requires Lenders to use client nonpublic information responsibly. When evaluating a lender or servicer’s compliance under the FCRA, a lender or servicer is deemed to be a furnisher of information to other entities. The furnisher is prohibited from reporting information relating to a consumer that is known to be inaccurate or the furnisher has reasonable cause to believe is inaccurate. The furnisher is held to a high standard and must provide accurate and complete information to Credit Reporting Agencies(CRAs).
Below are a few general checklist questions to determine a lender or servicer’s compliance with the Fair Credit Reporting Act.
What are our current procedures for collecting consumer information?
What is contained in the information we collect? Does it contain sufficient identifying information? (e.g income, employment status).
How is it housed? E.g technology used to house consumer information. Are there policies for this?
Is the information collected verified for accuracy? How? E.g Policies for verification of dates of delinquency.
How is the integrity of the information maintained? i.e is there a process flowchart?
What is the process of periodically updating the consumer information to verify accuracy?
Is there regular training to ensure the accuracy and integrity of the information collected from consumers?
Who has access to the consumer information and who has the ability to change the consumer information?
Are outside service providers involved in the consumer information gathering process? If so, is this process closely monitored for accuracy?
How often is negative information or any information reported to the Credit reporting agencies (CRAs)? What is the process?
Do we have standardized reporting formats and procedures for each CRA we report to?
Do we have internal controls regarding the accuracy and integrity of consumer information furnished to CRAs, e.g verifying random samples?
How do we ensure that duplicative information is not sent to CRAs(proper form of communication with CRA)? Is there a process in place?
Do we maintain consumer information for a reasonable period of time? How long?
Do we inform consumers about negative information which is in the process of or has already been placed on a consumer’s credit report within one month.
Do we notify a consumer when an adverse action is taken on the basis of a consumer report?