Finance
A Kansas borrower's loan application is denied based on information in their credit report. Under the Fair Credit Reporting Act, the lender must:
AKeep the reason confidential
BProvide an adverse action notice identifying the credit bureau and the borrower's right to obtain a free credit report✓ Correct
CImmediately delete the negative information
DRefer the borrower to another lender
Explanation
The Fair Credit Reporting Act requires lenders who take adverse action based on credit report information to provide the applicant with an adverse action notice identifying the reporting agency and their rights.
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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