FACTA includes which of the following requirements regarding credit scores?

FACTA includes which of the following requirements regarding credit scores?

• A. Disclosures for credit score upfront
• B. No disclosure of credit scores allowed
• C. Only annual disclosure of credit score
• D. Credit scores must be kept confidential from borrowers

Answer: (A)

Credit scores and how they influence lending decisions are addressed to promote transparency. When a lender uses a consumer’s credit score to determine eligibility or to set terms, FACTA requires an upfront disclosure letting the borrower know that a credit score will be used in the decision. This notice helps you understand why your application might be scored a certain way, and it often identifies the scoring model and the lender or reporting sources involved. The goal is to give you visibility and the opportunity to review or improve your score before a final decision is made. The other options don’t fit because FACTA does not forbid disclosures, does not limit them to only annual notices, and it does not require keeping scores confidential from borrowers—quite the opposite, it emphasizes transparency when a score is used.

Credit scores and how they influence lending decisions are addressed to promote transparency. When a lender uses a consumer’s credit score to determine eligibility or to set terms, FACTA requires an upfront disclosure letting the borrower know that a credit score will be used in the decision. This notice helps you understand why your application might be scored a certain way, and it often identifies the scoring model and the lender or reporting sources involved. The goal is to give you visibility and the opportunity to review or improve your score before a final decision is made. The other options don’t fit because FACTA does not forbid disclosures, does not limit them to only annual notices, and it does not require keeping scores confidential from borrowers—quite the opposite, it emphasizes transparency when a score is used.