South Carolina Life and Health Practice Exam

According to the Fair Credit Reporting Act, what does an insurer NOT need to do?

1. Provide a copy of the credit report to the applicant

2. Discuss any credit history inconsistencies with the applicant

3. Obtain permission to check the applicant's credit report

4. Notify the applicant about adverse actions based on credit history

The correct answer is: Discuss any credit history inconsistencies with the applicant

The Fair Credit Reporting Act (FCRA) establishes guidelines about how consumer information, including credit reports, can be gathered and used. While insurers are required to follow several protocols concerning the use of credit reports, there are specific actions they are not mandated to take, which clarifies why discussing any credit history inconsistencies with the applicant is not a requirement. Insurers must provide a copy of the credit report to the applicant upon request, and they must notify the applicant if any adverse actions are taken based on the information within that report. Additionally, obtaining the applicant's permission before checking their credit report is another requirement under the FCRA. However, the Act does not obligate insurers to engage in a discussion about inconsistencies in credit history with the applicant. This means that while an insurer must adhere to various guidelines for transparency and fairness in using credit information, conducting discussions over inconsistencies is not included as an obligation, allowing insurers the discretion on how to address such discrepancies.