Our examiners have suggested that we start pulling current credit scores on our consumer loan portfolios (even though we do not have risk-based lending/pricing); however, a question was raised as to whether or not there was a permissible purpose on a closed-end loan that is performing. While the information could assist us in analyzing risk in our portfolio and make sure we are adequately reserved, in reality we would not be doing anything with the borrower as long as the loan was current. Opinion on the FCRA issue?

What type of examiners? Under what regulatory guidance are they basing this suggestion?

Show them this letter and see if they still feel this way. Ignore the marketing aspect and focus on the discussion on pulling credit reports later on a closed-end credit.

http://www.ftc.gov/os/statutes/fcra/gowen.shtm

Thanks, exactly what I was looking for (and gives me good backup on the marketing note too). The examiner's point is tied to safety & soundness - that we need to be more pro-active in identifying deterioration in the loan portfolio (i.e. before payments become past due) in order to have an adequate ALLL. We understand that this might be useful for our HELOC portfolio because our loan agreement would allow us to freeze or lower the line. But it's an entirely different matter when it comes to auto and mortgage loans.