Just got a phone call from head of Retail. He wants to append each checking/savings customer's credit score to their file on our computer system, so that when the help desk pulls up their information, we can cross-sell according to credit score. There are so, so many reasons wrong with this. Besides FCRA/Legitimate Business Purpose, do any of you have any other regulatory/legal guidance for not allowing this practice? With this manager, I always have to put together a huge memo outlining the reasons for denying one of his ideas.

One concern I have Hannah is that a credit score is dynamic ... always changing.

MarkB

Take a look at this Comment letter from the Federal Trade Commission:

Gowen Letter

In particular, highlight this sentance for your Retail Manager:

Your questions raise the issue of whether a creditor in a closed end credit transaction may exploit consumer reports obtained for "review" purposes in order to market its products or services. In the circumstances you described, we believe the answer is "no."

A 3rd Party credit score is considered to be a "credit report." You can use the credit score for the transaction you contemplate at the time of obtaining the score, but you are not allowed to use it for anything else.

As the elcinoca pointed out, a credit score can change daily, so the credit score you get today can be meaningless in 6 months. A BETTER way to cross-sell to your customers is to develop an internal score based on average balance, length of time the account is opened, history of NSF activity, etc. and use THAT information for cross sell purposes.

There are tons of marketing programs out there that can analyse your customer transactions and provide information for cross-sell opportunities. Your Retail Manager needs to talk with Market Research folks. A truly successful marketing program requires the institution to put in some "elbow grease", not simply skim off the work performed by others for different purposes.

Or at least, that's how I see it!

We load the score at the time the loan was made into our loan system in order to track how various scores perform on their obligations over time. We're trying to build a history of performance based on the folks in our market. This is not used to cross-sell products.

You are allowed to utilize a consumer credit report for the purposes of monitoring the account for which the report was pulled. Tracking performance of an account to the initial credit score is necessary to validate the performance of the scoring system.