Has anyone ever received or know of any regulatory guidance on whether a prequalification provides permissible purpose to pull credit? I currently have an auditor that has stated pulling a credit report on a prequal would be a violation of FCRA and I am trying determine if I should concede.
I have always felt that it fits the permissible purpose of "intends to use the information in connection with a credit
transaction involving the consumer". When a customer requests a prequalification we pull a credit report and either inform the customer that they are prequalified or issue a adverse action. If we prequalify them for a mortgage and they later identify a property we consider it an applicaiton under RESPA and Reg B and issue disclosures. We will continue with the same credit report from the prequalification when they identify a property. So if we are pulling it with the intent to use it for the entire process of the credit transaction from prequal to closing how does it not fit this permissible purpose?

One previous discussion

It seems that there is no clear answer. Based on your posts in the discussion reference it appears you agree with me. How have your responded to auditors and or examiners on this issues?

Thanks,

How have your responded to auditors and or examiners on this issues?

I've never been questioned on the procedure and we went through a pretty thorough FDIC compliance exam in Jan.

It has never come up before from this auditor or from examiners but now that it is being written up I will need to determine whether to stick with my interpretation or concede.

Have them give you their citation and legal opinion rather than their personal opinion. If this is an outside firm - go higher.

I have sent an email to the CFPB to get an answer. If we do decide we need written authorization for prequals and since FCRA references e-sign would an email from the customer be sufficient? We are not providing disclosures electronically so I do not think that an e-sign disclosure would be necessary. This email would come after a telephone discussion and information including the customer's email address would be collected. So when the email is received we would be confident it is the person we spoke with.

I have been researching this same issue for months.

terpsfan, I would love to know if you have ever gotten a response from the CFPB on this issue?

Same here. Our procedures are an exact match to yours.