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#1066865 - 10/17/08 09:57 PM Credit Report adn Deposit accounts
mbernard Offline
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Joined: Jul 2008
Posts: 109
HI,

We pull credit reports for new members deposit accounts for cross selling purposes, under the legitamate business need exception. We currently have a sign displayed that says we are pulling Chexsystems, but not one for Credit Reports. When and how do we need to disclose to the consumer that we are pulling their credit? Is it ok to have a verbal agreement?

Thanks for your help in advance.

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#1066873 - 10/17/08 10:22 PM Re: Credit Report adn Deposit accounts mbernard
Dolly Nugent Offline
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Dolly Nugent
Joined: Nov 2000
Posts: 1,820
Southern California
You have a permissible purpose for pulling a credit report when you have a BONAFIDE APPLICATION for CREDIT. You aren't required to have a written application, but it's advisable so that the consumer doesn't claim they didn't give authorization.

I don't believe you have a permissible purpose to obtain a credit report (from a credit burea)when you are opening a DEPOSIT account. You must obtain the customer's signature to obtain their report,as they are not applying for credit.

I would be very leary of using credit reports for cross selling (marketing) purposes. Put yourself in the customer's position. Would you want someone running your credit report without YOUR knowledge or consent? People are getting more knowledgable and they know that their credit score is affected when their report is accessed. You are likely to upset a new customer and cause them to close their account by not dealing with them in an up-front manner regarding this.
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#1066877 - 10/17/08 10:27 PM Re: Credit Report adn Deposit accounts mbernard
GuitarDude Offline
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GuitarDude
Joined: Nov 2004
Posts: 5,925
So Cal
You may want to include in your account agreement or similar brochure that you may/will pull a credit report.

However, pulling credit reports and then using them for cross-selling products and services is not a permissible purpose. A credit report may only be used for the purpose for which is was obtained, in your case for qualification for the account. If you want to use credit bureau info for cross-selling/marketing purposes, you would need to establish pre-screening procedures and disclosures and be prepared to make a firm offer of any products for which the pre-screened person qualifies.
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#1066887 - 10/17/08 10:42 PM Re: Credit Report adn Deposit accounts GuitarDude
ktac MITCH Offline
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ktac MITCH
Joined: May 2005
Posts: 1,813
Giant side of TX
The answer to your original question of do we have a legit business reason to pull credit (and yes a verbal agreement is o.k.).
Is yes IF - you use it to underwrite all deposit account applicants & apply consistent criteria. ie you require a beacon score of XX or greater to open a deposit account.
IF you let anyone that passes checksystems open a deposit accout, regardless of how terrible their credit &you are just pulling to use to cross sell = then no you don't have a legit business reason for pulling credit & you have a problem
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#1066915 - 10/18/08 01:11 PM Re: Credit Report adn Deposit accounts ktac MITCH
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
But the caveat is that even if you have a legitimate business purposes to use the credit report for one purpose, you cannot use the same report for cross selling.

See the FCRA Staff Opinion - Gowan Letter

http://www.ftc.gov/os/statutes/fcra/gowen.shtm
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#1106828 - 01/07/09 05:32 PM Re: Credit Report adn Deposit accounts rlcarey
Rosebud123 Offline
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Joined: Oct 2003
Posts: 645
Florida
What is the client has an overdraft and we want to pull it for purpose of skip tracing.

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