The Fair Credit Reporting Act requires consumer-reporting agencies to follow procedures to ensure records are confidential, accurate, relevant, and properly used. Which statement best describes this purpose?

• A. Regulate the interest rates on loans.
• B. Enforce penalties for late payments.
• C. Require disclosure of all financial data to employers.
• D. Protect consumers against the circulation of inaccurate, obsolete personal or financial information.

Answer: (D)

The main idea being tested is how the Fair Credit Reporting Act protects the integrity of information used in credit decisions. The Act requires consumer-reporting agencies to keep records confidential and to ensure they are accurate, relevant, and used properly. That focuses on preventing the circulation of inaccurate or outdated personal or financial information, and it gives consumers rights to review and dispute data so corrections can be made. This is why the option describing protection against the spread of inaccurate, obsolete information best fits the purpose. The other statements don’t reflect this function: regulating loan interest rates, penalizing late payments, or mandating disclosure of all data to employers aren’t the goals of the FCRA, which centers on the accuracy and proper use of consumer information.