Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What is one of the key functions of the Fair Credit Reporting Act (FCRA)?

1. To prevent identity theft

2. To ensure accuracy of credit reporting

3. To regulate credit card companies

4. To provide financial education

The correct answer is: To ensure accuracy of credit reporting

One of the key functions of the Fair Credit Reporting Act (FCRA) is to ensure the accuracy of credit reporting. This legislation was enacted to promote fairness and accuracy in the reporting of consumer credit information and to protect consumers from the inappropriate use of their credit information. It establishes the rights of consumers with respect to the information that credit reporting agencies collect and maintain about them. The FCRA mandates that credit reporting agencies follow strict guidelines when collecting and reporting credit information, including the obligation to maintain accurate data and to investigate any disputed information. This means that if a consumer believes that their credit report contains inaccuracies, they have the right to dispute those inaccuracies, and the credit reporting agency must investigate the matter. The goal is to ensure that consumers are judged based on accurate information, which directly impacts their ability to secure loans, credit cards, and other financial products. Other options, while they may address important topics in financial management and consumer protection, do not capture the primary objective of the FCRA. For example, while preventing identity theft is a significant issue, it is not the primary focus of the FCRA, which is more concerned with the accuracy and fairness of credit reporting rather than solely about safeguarding against identity theft.