Inquiry - Permissible Purpose to Pull Credit?

Another thread said that an "inquiry" is a permissible purpose to pull credit. Would that apply in the following situation?

An MLO receives an inquiry about our mortgage products and rates. The MLO enters the "prospect's" name, address and SSN into our software and pulls credit. (TRID is not triggered.) Can we pull credit to respond to an inquiry? Our "Prospects" report shows "inquiries" that are almost a year old that never went any further. Some show FICOs below acceptable levels - we don't know if the MLO communicated anything, or if the individual simply indicated he would follow up if interested in applying. Should the MLO obtain written authorization before pulling credit in these "inquiry" situations? (We've had countless discussions that an AAN must be sent if they communicate a decision - but the prospects do not move to decisioning/underwrtiing and so sit out there.) Our software shows the date that the MLO enters the prospect information as an "application date" - which it really isn't - but causing headaches around HMDA & Reg B.

Thank you!

Well, on a legitimate inquiry, I think that you could justify that you had a permissible purpose.

Documentation and being able to standardize that within the organization is probably the biggest hurdle. It would be necessary in order for the bank to audit appropriately to ensure that the inquiry was legitimate, the information was used appropriately, and proper action was taken based on the information obtained and communicated.

As such, most banks have a no application - no credit report policy. It is too hard to manage otherwise.

If someone is asking about loan products, employees are trained to say, if your credit score is in the range of XXX then our current pricing would be XXX. This can vary of course based on your actual credit score and other factors.

The biggest issue that you are going to find is that officers are using these credit reports to prescreen applicants and there is a failure to provide proper adverse action notices and potentially the outright discouragement of applications from being submitted. Those are very dangerous areas to venture into.

Also, check your CRA contract and see if it outlines specific permissible purpose limitations.

This is very helpful! Thank you!