Texas Property and Casualty License Practice Exam

What is the main function of the Fair Credit Reporting Act?

1. Improve consumer access to credit

2. Protect consumers from adverse actions based on credit reporting

3. Facilitate faster credit approvals

4. Encourage financial literacy programs

The correct answer is: Protect consumers from adverse actions based on credit reporting

The main function of the Fair Credit Reporting Act (FCRA) is to protect consumers from adverse actions based on credit reporting. This federal law ensures that consumers have the right to know what information is contained in their credit reports and provides them with the ability to dispute inaccuracies. By imposing regulations on how credit information is collected, shared, and used, the FCRA aims to prevent discrimination against consumers based on the information in their credit reports. This ensures that no individual is unfairly penalized due to erroneous or misleading credit information. While improving access to credit, facilitating faster approvals, and promoting financial literacy are important within the broader financial ecosystem, they are not the primary focus of the FCRA. The law specifically emphasizes consumer protection and the accuracy of credit reports, ensuring that consumers can rely on fair and correct credit information in financial dealings.