We have a customer where we pulled their Credit Report on 2/22/2013 for their business line of credit renewal. We now have a new HELOC application for them dated 3/18/13 where their credit report is still current. Do we re-send the Credit Score Disclosure Notice from 2/22/2013 for this new HELOC request, or should we pull their credit again (which would affect their credit score) and send a new Credit Score Disclosure Notice?

Thanks!

If the bank is relying on an old credit report, this disclosure is still required and should be prepared using the information from the old report. This disclosure does not require you to pull a new credit report for each new loan application.

Thanks Southern Banker. In terms of a best practice for relying on a previously pulled credit report, can you/someone point me to a resource? For instance, in our case we pulled credit less than 30 days ago - do lenders typically rely on a credit report they pulled previously if it's less than 30 days old? something else? Thanks!

You'll get views from two different camps with respect to this issue.

The conservative approach - The FCRA does not permit use of a credit report other than for the purpose intended, meaning you cannot use previously obtained credit report for a new request for credit.

But many banks do this. If you do, it should be in policy and strictly adhered to.

With respect to your comment that you're concerned about the fact that obtaining a new credit report might affect the customer's score.....well, new loan request, new credit hit. That's the way it works. If you protect some customers from that extra inquiry and not others, you might get your bank into hot water.

Our consumer lending underwriting is automated. If an application is submitted through the underwriting software, the software obtains a new credit report .....nothin' anyone can do about it.

Just my opinion............

I'm in the conservative camp, as swiggles would put it. If I pull credit for Loan A, I can use it to evaluate the applicant for Loan A. If the applicant applies for Loan B, I would pull another credit report. The only exception to this would be the case where the applicant amended his or her application. For example, if the consumer applied for a 30-year loan and 10 days later decided he or she wanted a 15-year loan, I would update the application but use the same credit report.

I have this discussion a lot around here. I don't understand the "customers don't want their credit dinged" argument. As Swiggles said above, if you're that worried about dinging your credit, don't apply for so many loans i guess.

On the other hand, for business (commercial) customers who are individuals (not corp, LLCs, etc), who borrow frequently on a short term basis and for which an overall guidance line has NOT been established, I can see not obtaining a new report for every request.

That's kind of why I don't understand the "shopping" aspect of mortgage lending....not that a consumer really does that in the real world, but why would a customer want to go to several banks for comparative purposes and have each bank obtain a credit report just to get their hands on that all-important GFE?

IMO, the "ding" associated with a credit pull is overstated in most cases. I certainly don't think the number of credit pulls is nearly as important in lowering the score as delinquencies, etc. are.

I agree, ritchjay! I've been preparing mortgage denial letters....UNBELIEVABLE!!!

A first today. The consumer had at least 15 collection accounts and filed a dispute on EACH one of them. WHATEVER!

Another first today....a consumer with the same number of collections, all from writing NSF checks. FOREVERMORE!

PEOPLE, PEOPLE, PEOPLE!!!

Make sure you are providing the "Notice to Home Loan Applicant" disclosure for the HELOC. When the report was pulled for the commercial purpose application, it may not have included the NHLA, which would be necessary for the consumer purpose application.

I have a slightly different twist...let's say we run credit at the time of application, then we end up having to run it again at a later time in the application process. Do we have to give the NHLA/Credit Score disclosures for each pull or only for the last one since that was the one we used in our credit decision?

bump

(g) Disclosure of Credit Scores by Certain Mortgage Lenders

(1) In general. Any person who makes or arranges loans and who uses a consumer credit score, as defined in subsection (f), in connection with an application initiated or sought by a consumer for a closed end loan or the establishment of an open end loan for a consumer purpose that is secured by 1 to 4 units of residential real property (hereafter in this subsection referred to as the “lender”) shall provide the following to the consumer as soon as reasonably practicable:


I see nothing that indicates one and done.