South Carolina Life and Health Practice Exam

What is the main purpose of the Fair Credit and Reporting Act?

1. To protect consumers from fraudulent activities

2. To regulate insurance pricing

3. To protect consumers with guidelines regarding credit reporting

4. To promote competition among lenders

The correct answer is: To protect consumers with guidelines regarding credit reporting

The main purpose of the Fair Credit Reporting Act (FCRA) is to protect consumers with guidelines regarding credit reporting. This law ensures that consumers have the right to access their credit information and allows them to dispute inaccuracies in their credit reports. It establishes procedures that credit reporting agencies must follow to promote fairness, accuracy, and privacy of the information in consumer credit reports. The Act also requires that consumers be informed when information in their credit report is used against them, which gives individuals an opportunity to understand and rectify errors that might affect their creditworthiness. By setting standards for how credit information is collected, shared, and used, the FCRA helps safeguard consumer rights in the financial system, making it an essential component of consumer protection legislation. This focus on consumer rights and the accuracy of credit data is central to the legislation's intent and purpose.