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#2262488 - 11/15/21 05:12 PM Permissible purpose under FCRA
Compliance Nut Offline
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If an institution receives a personal financial statement that includes a husband and wife, can the wife's credit report be pulled WITHOUT having first verified either 1) her intent to apply for joint credit, or 2) her ownership interest in the business (i.e.owner or officer of the business)?

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#2262502 - 11/15/21 06:49 PM Re: Permissible purpose under FCRA Compliance Nut
rlcarey Online
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Galveston, TX
No - receiving a personal financial statement means nothing. You need an intent to apply or her ownership interest if you require loans to closely held business to be guaranteed by the principals of the business,
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#2262507 - 11/15/21 07:15 PM Re: Permissible purpose under FCRA Compliance Nut
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Someone told me that since it's in the state of Wisconsin, that they are permitted to because it's a community property state. But, that only has to do with property liens, etc., right?

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#2262511 - 11/15/21 07:31 PM Re: Permissible purpose under FCRA Compliance Nut
rlcarey Online
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rlcarey
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You need an application for credit. You have yet to tell us that you have one, from whom and under what circumstance. Can you pull a credit report on a spouse in a community property State? Yes, under certain circumstances but you haven't provided enough information to even indicate that you have a permissible purpose..
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#2262514 - 11/15/21 07:39 PM Re: Permissible purpose under FCRA Compliance Nut
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Unfortunately, there is no formal application for a business loan and though we have a PFS document, we also accept PFS documents that may have been used by the applicant to apply with other institutions (i.e., it's on a form with their logo). Since this documentation alone does not necessarily constitute an "application", my main concern was whether a credit reports can be pulled just because we received a PFS in both names. Often the PFS is prepared with both names, but the wife is not applying for credit and does not have an ownership interest I the business.

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#2262516 - 11/15/21 08:37 PM Re: Permissible purpose under FCRA Compliance Nut
rlcarey Online
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rlcarey
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Galveston, TX
Then you are in no-man's land. You have no idea if you have an application or even who is applying for the loan (individually, as a business, etc.) or what is being applied for. I am not sure anyone can answer your question and if we cannot, the regulators are not going to know the answer either and that is always a really bad situation. You have no idea whether you can pull credit on either of the parties on the financial statement, with or without written permission.
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#2262535 - 11/16/21 01:04 AM Re: Permissible purpose under FCRA Compliance Nut
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That's fair...and it makes sense. If the commercial lender says: I spoke to the husband and I know what he's looking for in terms of product, terms, etc. and I asked him to provide a PFS, tax returns and business financials (and all have been received). It's not a loan to any of the individuals (so, not for joint credit)......can they pull credit on both the husband and the wife? To be clear, what the leader didn't specify was whether the wife is an owner/officer of the business. Can a report be pulled without this and be in compliance with FCRA?

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#2262545 - 11/16/21 04:17 PM Re: Permissible purpose under FCRA Compliance Nut
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You're going to have to figure out if you have an application or not first. If you don't then, you can't pull credit on anyone without written permission. Considering the documentation that has been provided, I am going to assume you do have an application. I'm also going to ignore you stating that only individuals borrowers are covered by joint intent (that is not accurate).

Assuming you have an application (which you need to have an internal definition for if you want to comply with FCRA and ECOA even if you don't have written applications), here is some commentary that may or may not still be relevant as it predates the switch of rulemaking over to CFPB. I do not know Wisconsin law or the "product, terms etc." well enough to know whether you can pull credit on the spouse here.

5. Information on an Applicant's Spouse

A. Permissible purpose. A creditor may request any information concerning an applicant's spouse if that spouse will be permitted to use the account or will be contractually liable upon the account, or the applicant is relying on the spouse's income as a basis for repayment of the credit requested. A creditor may request any information concerning an applicant's spouse if (1) the state law doctrine of necessaries applies to the transaction, or (2) the applicant resides in a community property state, or (3) the property upon which the applicant is relying as a basis for repayment of the credit requested is located in such a state, or (4) the applicant is acting as the agent of the nonapplicant spouse.

B. Lack of permissible purpose. If the creditor receives information clearly indicating that the applicant is not acting as the agent of the nonapplicant spouse, and that the applicant is relying only on separate property to repay the credit extended, and that the state law doctrine of necessaries does not apply to the transaction and that the applicant does not reside in a community property state, the creditor does not have a permissible purpose for obtaining a report on a nonapplicant spouse. A permissible purpose for making a consumer report on a nonapplicant spouse can never exist under the FCRA, where Regulation B, issued under the Equal Credit Opportunity Act (12 CFR 202), prohibits the creditor from requesting information on such spouse. There is no permissible purpose to obtain a consumer report on a nonapplicant former spouse or on a nonapplicant spouse who has legally separated or otherwise indicated an intent to legally disassociate with the marriage. (This does not preclude reporting a prior joint credit account of former spouses for which the spouse that is the subject of the report is still contractually liable. See discussion in section 607, items 3--D infra.)

https://www.fdic.gov/regulations/laws/rules/6500-2700.html

Here's a good but dated reference for FCRA (https://www.ftc.gov/sites/default/f...ary-interpretations/110720fcrareport.pdf)

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