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#1180482 - 05/11/09 05:44 PM Business Services Annual Reviews
mbernard Offline
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Joined: Jul 2008
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Our Business Services pulls credit for an annual review for our Business members. If they pull credit for this purpose (not for a transaction or an offer of service) and there is a Red Flag on the Credit Report, what should they do? I don't think they need to document because no services are being offered, etc. But then how do we tell if the Credit Report was pulled for this purpose or if they forgot to document it in a regular application? Any suggestions? I hope that made sense.

Thanks!

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#1180875 - 05/12/09 02:48 AM Re: Business Services Annual Reviews mbernard
rlcarey Offline
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rlcarey
Joined: Jul 2001
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Galveston, TX
"an annual review for our Business members"

Sorry, I'm a little rusty on the definition of "business member". Are these individual accounts that are business related or actual business entities and you are pulling the reports on the principals of the business?

If you are pulling reports for review purposes, they should be coded as such as to not impact the indivdiual's credit scores. So regardless, you need to review your credit bureau contract and make sure you are pulling them properly. These types of pulls should not have red flags on them.
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#1181122 - 05/12/09 02:37 PM Re: Business Services Annual Reviews rlcarey
mbernard Offline
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Joined: Jul 2008
Posts: 109
The account itself is an entity. But the owners or signers on these accounts are who we pull annual credit on to verify they can still qualify for the limit they have on a BLOC.

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#1181167 - 05/12/09 02:54 PM Re: Business Services Annual Reviews mbernard
rlcarey Offline
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rlcarey
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Galveston, TX
Unless the owners or signers on these accounts have personal liability, i.e. actually signed a personal guarantee, you have no permissible purpose to pull a credit report on these individuals for review purposes.
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#1237113 - 08/21/09 06:50 PM Re: Business Services Annual Reviews rlcarey
Yada...Yada...Yada... Offline
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We service a state business loan program, take payments, and monitor loan accounts for repayment. The state agency that underwrites the loans wants us to pull and annual credit report on the individuals that have guaranteed the loans. Is this a permissible purpose? Does the Gowen Letter affect this?
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#1238125 - 08/24/09 09:49 PM Re: Business Services Annual Reviews Yada...Yada...Yada...
Yada...Yada...Yada... Offline
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Ok, I've researched this until I'm blue in the face. I seem to find some posts that says it's ok to pull a credit report to review the credit of guarantors during the term of the loan, and some posts do not. Can we pull a credit report on a guarantor for annual reviews on the following?

1. Closed-end commercial loan?
2. Open-End LOC for commercial loan?

Is the Gowen letter the only reference for this? How liberally can the "legit purpose" reason be used? In the current environment, a long term guaranty isn't worth anything in year two if that guarantor starts losing money hands over fist and starts taking on tons of debt. Wouldn't it be a legit business need to pull a credit report periodically to check their obligations?

Or is this possible if the guarantee authorizes periodic credit report pulls?
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#1238168 - 08/25/09 01:39 AM Re: Business Services Annual Reviews Yada...Yada...Yada...
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,637
Galveston, TX
Unless you have the continuing authorization to pull credit reports in your agreement with the guarantors, I'm not sure how you would pull this off. Additionally, if the guarantors don't continue to qualify for the credit, does your loan agreement allow you to declare the loan in default even if it is performing??? Otherwise, what difference does it make??? You need to be talking to your attorney
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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