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Fair Credit Reporting: 16.3.1.1 Ubiquity of Credit Scores

The use of credit scores in determining whether to extend consumer credit, and the terms of that credit, has grown dramatically in the past few decades, particularly in the home mortgage business. Over ninety percent of mortgage lenders and credit-card issuers use credit scores in making lending decisions.77 The leading scoring provider, FICO, reports that ten billion of its scores are purchased every year.78

Fair Credit Reporting: 16.3.1.2 Credit Invisibility

The vast majority of adult Americans, nearly 200 million, have a credit score, but a smaller percentage are “credit invisible.”82 A CFPB study found that about twenty-six million consumers, or 11% of the adult U.S. population, lack any file at the nationwide consumer reporting agencies.83 Another nineteen million consumers, or 8.3% of the adult U.S.

Fair Credit Reporting: 16.4.1.1 Which CRAs Are Required to Disclose Credit Scores

The FCRA requires consumer reporting agencies to disclose credit scores to consumers upon their request, for a fee.99 A CRA is required to disclose a credit score if the CRA either: (1) distributes scores that are used in connection with residential real property loans or (2) develops scores that assist credit providers in understanding the general credit behavior of a consumer and predicting the future behavior of the consumer.100

Fair Credit Reporting: 16.4.1.3 Price of a Credit Score

The CRAs may charge a fee for the credit score, as determined by the CFPB.114 Previously, this authority was granted to the FTC.115 The FTC issued an Advanced Notice of Proposed Rulemaking (ANPR) in 2004, in which the agency appeared to be considering setting the fee at a price similar to the prices charged in the unregulated market, which the FTC cited as from about four to eight dollars.116

Fair Credit Reporting: 16.4.1.4 What Scores Are Required to Be Disclosed

The FCRA requires that the credit score disclosed by the CRAs must either (a) be generated using a scoring model that is widely distributed to users by the CRA in connection with residential real property loans or (b) assist the consumer in understanding the assessment by the credit scoring model of their credit behavior and predications about that behavior.121 The second option permits CRAs to disclose credit scores that are not used by lenders at all.

Fair Credit Reporting: 16.4.1.5 Disclosure of Non-Credit Risk Scores

The FCRA’s requirement to disclose credit scores at section 1681g(f) only requires the CRAs to disclose risk scores that predict “credit behavior.”127 This particular requirement does not require CRAs to disclose any other type of risk score, such as specialty scores;128 the FCRA’s general requirement for disclosure of consumer reports specifically exempts not only credit scores, but also “risk scores or predictors.”129 This lack of a d

Fair Credit Reporting: 16.4.1.6 How to Obtain a Credit Score

Consumers who wish to obtain their credit scores for a fee can go to the FICO website, which offers a number of different FICO score products to consumers. Consumers can purchase a copy of their FICO score based on either their Equifax, Experian, or TransUnion file, or they can purchase all three scores. Consumers can also get their credit reports from one or all of these CRAs when they buy their FICO scores from the myfico.com website.132

Fair Credit Reporting: 16.4.3.1 When Required

The FCRA requires mortgage lenders who use credit scores in connection with an application for residential real-estate secured credit to provide, free of charge, certain credit scoring information. This requirement applies to both open-end and closed credit secured by one- to four-family residential real estate, including purchase and refinance transactions.146 This requirement applies regardless of the final action taken by the lender on the application.

Fair Credit Reporting: 13.3.1 Overview

A violation of the FCRA is a violation of the various statutes providing general enforcement powers to each of the federal agencies with FCRA administrative enforcement jurisdiction.75 In general, the agencies may utilize their normal statutory enforcement authority to enforce the FCRA.76

Fair Credit Reporting: 13.3.2 CFPB Enforcement Powers

Like the other agencies currently or formerly invested with enforcement authority by the FCRA, the CFPB utilizes its own statutory enforcement powers to enforce the FCRA.77 The CFPB’s enforcement powers are defined in Subtitle E of Title X of the Dodd-Frank Act.78 The CFPB is not required to engage in a rulemaking prior to bringing an enforcement action.79

Fair Credit Reporting: 13.3.3 FTC Enforcement Powers

The FTC can use the powers it has under the FTC Act to secure compliance, irrespective of whether the defendant is engaged in “commerce” or meets any other jurisdictional tests in the FTC Act.90 The FTC’s authority encompasses the United States, the District of Columbia, the Commonwealth of Puerto Rico, and all the United States territories, but does not extend to activities outside those areas.91 Prior to the Dodd-Frank Act, this breadth of jurisdiction made the FTC the principal enforcement agency

Fair Credit Reporting: 13.3.4 FTC Ability to Seek Civil Penalties from Information Furnishers Is Limited

There is a significant limitation on the FTC’s authority to seek civil penalties for violations of the FCRA against information furnishers. The FCRA imposes several duties on furnishers when they furnish information to CRAs.99 One of the most critical duties is a limited duty not to report inaccurate information, which is not privately enforceable.100 It is also this duty for which the FTC’s authority to impose civil penalties is sharply curtailed.

Fair Credit Reporting: 13.3.5 Consumer Complaint Referral Process

The CFPB has statutory obligations with regard to consumer complaints about credit reporting. The statutory requirements are limited; however, the CFPB has the authority to create more robust complaint systems than those required by statute, and has done so.

Fair Credit Reporting: 13.4.1 Overview

Public FCRA enforcement actions are often resolved through consent decrees that can aid consumers who seek to bring their own case. Strictly speaking, an FTC or CFPB consent order or settlement does not adjudicate disputed issues of fact and does not decide a disputed issue of law.

Fair Credit Reporting: 13.4.3.1 Generally

The CFPB has taken a number of enforcement actions that involve consumer reporting issues, sometimes through joint efforts with the FTC.162 Some of these enforcement actions fall under sections of the FCRA that have no private right of action,163 whereas other actions it has brought against furnishers and consumer reporting agencies can also be brought by individual consumers.164

Fair Credit Reporting: 13.4.3.3 Claims Against Furnishers Under § 1681s-2

The CFPB has brought enforcement actions against furnishers for violations under section 1681s-2(a) for furnishing inaccurate information about consumers to CRAs that it knew or had reasonable cause to believe was inaccurate, as well as under section 1681s-2(b) for failure to conduct reasonable investigations of consumer disputes or to do so in a timely manner.

Fair Credit Reporting: 9.2.2.3.1 Introduction

An identity theft victim can seek a second type of alert, an extended fraud alert. The extended fraud alert lasts seven years.73 In order to obtain this alert, the consumer must (1) file a qualifying “identity theft report” with a law enforcement agency, and (2) provide the CRA with “appropriate proof of identity.”74