questions on pulling credit reports

Posted By: pjs

questions on pulling credit reports - 03/11/20 03:21 PM

Hello- I have a few questions:
Has anyone pulled a "No-Hit" credit report on a loan applicant and if so what did you do? We get them on consumer loan applicants for car loans etc- we wait a few minutes and then pull another one that is a good report on the applicant. We are in the process of finding out if there is a glitch with the credit reporting agency-
My question is some loan officers do not bother to look at the credit report- and close the loan with the No Hit report- after the loan is closed and the No Hit is found then the loan officer pulls another credit report. I don't believe it is right to do so. The loan is closed what permissible purpose does the loan officer have to pull a credit report?
An employee said the bank has permission to pull credit anytime since the customer has loans with us. I don't agree.

Another question- a home equity loan applicant did not qualify for a certain interest rate based on his credit score- so almost 30 days later he asked the loan officer to pull his credit report again because he paid down some debt and maybe paid one off- and so the loan officer did and the applicant qualified for the HE interest rate he wanted. So, is this ok for a loan officer to do?

Thanks so much.
Posted By: Gertie

Re: questions on pulling credit reports - 03/11/20 04:30 PM

Regarding the pulling of credit after the loan has closed: I believe it is too late, the credit decision has already been made. What is the valid business purpose at this point? If the loan becomes delinquent, is being renewed or modified, yes a new credit report may be obtained. page 6.

Permissible Purposes of Consumer Reports – Section 604; 15 U.S.C. 1681b Investigative Consumer Reports – Section 606; 15 U.S.C. 1681d

Regarding your LO pulling CBR at customer request in order to get interest rate reduced, not something we would condone, but it probably depends on your institutions policy regarding such matters.
Posted By: Dan Persfull

Re: questions on pulling credit reports - 03/11/20 04:41 PM

but it probably depends on your institutions policy regarding such matters.

That would be a dangerous policy to have. Pulling a credit report at the consumer's request without an accompanying request for credit is not a legitimate business purpose for the financial institution.
Posted By: pjs

Re: questions on pulling credit reports - 03/11/20 04:47 PM

Oh! Thank you for making me feel like I know what I am talking about to top management. I appreciate your help so much.
Posted By: rlcarey

Re: questions on pulling credit reports - 03/11/20 05:20 PM

And what exactly is a "no-hit" report? I doubt that you have a permissible permission for those either, if these are actually review reports.

In a 1999 letter, the FTC staff opined on this issue in the context of closed-end credit transactions. Because the terms of closed-end credit transactions are generally predetermined and thus may not be changed unilaterally by the creditor, the staff opined that the creditor in that instance did not have a “review” permissible purpose. The Staff Summary adopts the essence of this opinion, but makes clear that the analysis does not turn on whether or not the account is open-end or closed-end. Staff believes that the “review” permissible purpose applies only where the creditor has an existing account relationship with the consumer and uses the report solely to decide whether to modify the terms of the account.
Posted By: pjs

Re: questions on pulling credit reports - 03/11/20 08:24 PM

I am glad you wrote this too because this helps in my conversations that you just can't pull credit reports because the applicant has accounts with us. Thank you.

Anyhow the "no hit" credit report- I was told that it was a glitch in the credit report system when loan officers pulled a credit report on an applicant- sometimes they would get a "no-hit" credit report- it said exactly that at the top of the credit report- No Hit - no other info on the top part and in the middle part just the info the loan officer inputted-

I asked management if someone would ask Equifax why a no hit was happening and what could be done about it because last quarter there has been a lot more no hits being pulled. I just found out today that a No Hit credit report from Equifax is on an individual that has no report yet with Equifax and by inputting the information again after a No Hit credit report pulls then a credit report will come out with the information on the individual. The good credit reports we get after a no hit has been individuals with no credit history or beacon scores. That is nice to know now.
Posted By: pjs

Re: questions on pulling credit reports - 03/11/20 08:27 PM

The above is on a loan application when they pull credit- in the cases I have talked about. thanks