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#1662197 - 02/08/12 07:08 PM Use of credit report after permissible purpose
Matt_B Offline
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Matt_B
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It's the lovely time when we are working out how to accomplish our sales and service goals for the year and an idea was posed that made bells and whistles go off in my head as a bad one.

In order to encourage cross-selling and loan growth, it has been proposed that when a mortgage or indirect vehicle loan closes, the respective loan officers will forward a copy of the application and credit report to our consumer loan department to be reviewed for possible opportunities for loan or credit card sales.

I'm thinking this is not a permissible purpose, but since it sounds like such a reasonable idea to most people, I need a firm and clear argument for why it shouldn't/can't be done. I'm getting hung up on the fact that it was obtained for a legitimate purpose, but trying to decide what discretion we have to use it after the fact for what is essentially marketing purposes.

Any advice?
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#1662260 - 02/08/12 08:10 PM Re: Use of credit report after permissible purpose Matt_B
rlcarey Offline
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Read your credit bureau contract - it will give you all the answered you need. It will state that you agree to only use a credit report for the purpose for which it was pulled. Then read the FTC Interpretations document released in 2011 and it will tell you the same thing
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#1662813 - 02/09/12 06:14 PM Re: Use of credit report after permissible purpose Matt_B
Matt_B Offline
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Okay, so I'm reviewing and found some supporting statements I can quote, but I can see them being picked apart. Most notably, the one from the act itself that states:

"A. Marketing purposes. This section does not allow a CRA to provide a creditor with consumer reports to "review" accounts in order to market its other products or services.122 See also comments 603(m)-1 and 604(a)(3)(F)-6. "

That seems helpful at first, but the CRA is providing the report for a permissible purpose, not for the purpose of reviewing the account, so I don't think it will be solid enough to convince anyone.

I have this from the interpretation "This means that even if a creditor has a permissible “review” purpose to obtain a consumer report, it may not exploit the report to market other products or services to the consumer." which is exactly what I need though.

Next, to the contract to find something else supportive. Assuming it can be found without having to request a copy from Equifax...sigh.
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#1662829 - 02/09/12 06:42 PM Re: Use of credit report after permissible purpose Matt_B
rlcarey Offline
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"This means that even if a creditor has a permissible “review” purpose to obtain a consumer report, it may not exploit the report to market other products or services to the consumer."

The "review" portion of this statement is interchangable with every other permissible purpose that you might have. The only way to market through the use of credit reports is through the prescreening process.
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#1662844 - 02/09/12 06:38 PM Re: Use of credit report after permissible purpose Matt_B
Matt_B Offline
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Certainly makes sense to me, and the supporting evidence seems substantial. I appreciate the comments and guidance.

Now, if only I can make everyone understand that just because we have it doesn't mean we can use it however we want to! smile
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#1750344 - 10/18/12 04:45 PM Re: Use of credit report after permissible purpose Matt_B
TINKerBell Offline
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Can I take this in a slightly different direction? What if a LO wants to use closed loan info from a bank loan origination system, including ltv, credit score, and credit history. Technically they are not using the actual credit report or pulling a new report, but rather using data that has been imported from the original CRA into the bank's software system (for argument's sake 2 years ago). I say the data was obtained from the credit report, therefore is not permissible to use. Any thoughts?
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