A team member asks about FCRA Credit Report Requirements in a compliance desk review while trying to confirm the rule-based response. Which response should the loan team use?
Correct Answer
B) Keep consumer-report information within authorized use
Why this is correct: Under the Fair Credit Reporting Act (FCRA), a company that receives a consumer report must ensure the information is used only for the authorized purpose for which it was obtained and is kept confidential. "Keep consumer-report information within authorized use" directly reflects this duty to restrict access and use to legitimate business needs related to the credit transaction. Why the other choices are wrong: "Resolve the FCRA Credit Report Requirements issue with the flood insurance exception that does not fit the facts" is wrong because flood insurance rules (NFIP) are unrelated to FCRA credit report handling. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because FCRA compliance is mandatory from the moment a report is obtained, not optional. "Rely on oral agreement when the rule requires documented compliance" is wrong because FCRA requires documented procedures for safeguarding and properly disposing of consumer report information. Exam tip: FCRA requires both a permissible purpose to obtain a report and ongoing safeguards to limit its use. Think: "Need to know" basis only.
Why This Is the Correct Answer
The correct response is "Keep consumer-report information within authorized use" because Consumer reports require a permissible purpose and proper FCRA/Reg V handling.
Why the Other Options Are Wrong
Option A: Resolve the FCRA Credit Report Requirements issue with the flood insurance exception that does not fit the facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Wait until a regulator asks for the file before applying the federal requirement.
Wait until a regulator asks for the file before applying the federal requirement. is not correct because it does not apply the rule tested by this file scenario.
Option D: Rely on oral agreement when the rule requires documented compliance.
Rely on oral agreement when the rule requires documented compliance. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
FCRA credit-reporting rules: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to FCRA credit-reporting rules; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
More Federal Laws Questions
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