topic Re: Why do some banks and credit unions do a hard pull? in Personal Finance

Why do some banks and credit unions do a hard pull?

folks19 — Mon, 20 Jul 2020 01:14:25 GMT

Why do some banks and credit unions do a hard pull on one's credit report even if they are not applying for any sort of credit (loan or credit card)? Shouldn't credit reports be just for credit inromation? By doing a hard pull, other lenders think that one is seeking credit while really he or she is only applying for a bank account?

Besides, why are banks even interested in one's cerdit report if they are not applying for credit?

Re: Why do some banks and credit unions do a hard pull?

RadioRob — Mon, 20 Jul 2020 04:00:41 GMT

Even with a debit card, there is a chance of transactions being run that don’t have sufficient funds. For example if the CU is doing maintenance on their systems, and you make a purchase, it will auto approve certain transactions.

If they allow you to OD your checking account and pay a charge without sufficient funds, they’re loaning you money.

Like most anything else, there’s no hard and fast rules. It’s more of a general framework that is implemented differently by each organization.

Re: Why do some banks and credit unions do a hard pull?

folks19 — Mon, 20 Jul 2020 04:45:02 GMT

@RadioRob wrote:
Even with a debit card, there is a chance of transactions being run that don’t have sufficient funds. For example if the CU is doing maintenance on their systems, and you make a purchase, it will auto approve certain transactions.

If they allow you to OD your checking account and pay a charge without sufficient funds, they’re loaning you money.

Like most anything else, there’s no hard and fast rules. It’s more of a general framework that is implemented differently by each organization.

But most Hanks don't, so why do those few banks have to do a hard pull?

And besides, they can get the same information with a soft pull, so what's the point of reporting the inquiry as "seeking credit" when the person isn't actually seeking credit?

(The purpose of a hard pull is to report that the person is seeking credit. If the inquiry is done for another reason, for example, account reviews, then the reason for the inquiry is NOT "seeking credit", but rather it is for account reviews.)

Re: Why do some banks and credit unions do a hard pull?

Anonymous — Mon, 20 Jul 2020 06:11:05 GMT

Read the Scoring Primer.

Re: Why do some banks and credit unions do a hard pull?

Anonymous — Mon, 20 Jul 2020 06:29:17 GMT

@folks19 wrote:
@RadioRob wrote:
Even with a debit card, there is a chance of transactions being run that don’t have sufficient funds. For example if the CU is doing maintenance on their systems, and you make a purchase, it will auto approve certain transactions.

If they allow you to OD your checking account and pay a charge without sufficient funds, they’re loaning you money.

Like most anything else, there’s no hard and fast rules. It’s more of a general framework that is implemented differently by each organization.
But most Hanks don't, so why do those few banks have to do a hard pull?
And besides, they can get the same information with a soft pull, so what's the point of reporting the inquiry as "seeking credit" when the person isn't actually seeking credit?
(The purpose of a hard pull is to report that the person is seeking credit. If the inquiry is done for another reason, for example, account reviews, then the reason for the inquiry is NOT "seeking credit", but rather it is for account reviews.)

Checking/savings accounts can pose quite a bit of exposure risk in the case of OD/fraud/bounced checks; HPs and inquiries, along with other info from Chex/EWS, can reduce that risk, but it only works when the majority reports that info.

Re: Why do some banks and credit unions do a hard pull?

Brian_Earl_Spilner — Mon, 20 Jul 2020 06:52:13 GMT

@Anonymous wrote:
Read the Scoring Primer.

Bro, I feel like I'm studying for a test when I try to read that thing.

Re: Why do some banks and credit unions do a hard pull?

Anonymous — Mon, 20 Jul 2020 11:30:35 GMT

😂😂😂😊

Re: Why do some banks and credit unions do a hard pull?

randomguy1 — Mon, 20 Jul 2020 13:51:40 GMT

Just a note, some of these financial institutions only do a hard pull when you do not decline overdraft protection.

Re: Why do some banks and credit unions do a hard pull?

folks19 — Mon, 20 Jul 2020 15:18:04 GMT

@Anonymous wrote:
@folks19 wrote:
@RadioRob wrote:
Even with a debit card, there is a chance of transactions being run that don’t have sufficient funds. For example if the CU is doing maintenance on their systems, and you make a purchase, it will auto approve certain transactions.

If they allow you to OD your checking account and pay a charge without sufficient funds, they’re loaning you money.

Like most anything else, there’s no hard and fast rules. It’s more of a general framework that is implemented differently by each organization.
But most Hanks don't, so why do those few banks have to do a hard pull?
And besides, they can get the same information with a soft pull, so what's the point of reporting the inquiry as "seeking credit" when the person isn't actually seeking credit?
(The purpose of a hard pull is to report that the person is seeking credit. If the inquiry is done for another reason, for example, account reviews, then the reason for the inquiry is NOT "seeking credit", but rather it is for account reviews.)
Checking/savings accounts can pose quite a bit of exposure risk in the case of OD/fraud/bounced checks; HPs and inquiries, along with other info from Chex/EWS, can reduce that risk, but it only works when the majority reports that info.

But again, they can get the SAME information via a soft pull, so why do a hard pull?

Re: Why do some banks and credit unions do a hard pull?

Anonymous — Mon, 20 Jul 2020 18:03:08 GMT

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Inquiry-Master-Thread-understanding-inquiries-and-how-the-affect/m-p/5948669/highlight/true#M167289

Re: Why do some banks and credit unions do a hard pull?

RadioRob — Mon, 20 Jul 2020 18:36:19 GMT

The info they get back is the same, but its more about recording the fact the event happened. They get value from a risk perspective in knowing if you've opened a bunch of accounts, or that you were trying to establish a relationship. So they report that data. (Garbage in, garbage out.)

They know not everyone reports the data, but they report data they feel is important.

This is not about trying to not "hurt" your credit. It's about having data to measure their risk.

Re: Why do some banks and credit unions do a hard pull?

folks19 — Mon, 20 Jul 2020 19:18:56 GMT

@RadioRob wrote:
The info they get back is the same, but its more about recording the fact the event happened. They get value from a risk perspective in knowing if you've opened a bunch of accounts, or that you were trying to establish a relationship. So they report that data. (Garbage in, garbage out.)

They know not everyone reports the data, but they report data they feel is important.

This is not about trying to not "hurt" your credit. It's about having data to measure their risk.

But the purpose of a hard pull is to report that the person is "seeking credit", and not that the person is opening accounts (unless it's a credit account) or establishing membership with a bank. There are other consumer reporting companies for that purpose, like Chexsystyms. It would only make sence for a bank to do a hard pull if the person is applying spesifically for an overdraft line of credit, but in general, the person is only applying for an account that can be used to manage finances.

Re: Why do some banks and credit unions do a hard pull?

folks19 — Mon, 20 Jul 2020 19:25:50 GMT

@Anonymous wrote:
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Inquiry-Master-Thread-understanding-inquiries-and-how-the-affect/m-p/5948669/highlight/true#M167289

I think that was helpful information in general, but it doesn't address why there would be a hard pull for a non-credit application. Most banks won't even do a soft pull for just a bank account, so why would some do a hard pull?

Re: Why do some banks and credit unions do a hard pull?

Anonymous — Mon, 20 Jul 2020 19:38:01 GMT

@folks19 wrote:
@Anonymous wrote:
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Inquiry-Master-Thread-understanding-inquiries-and-how-the-affect/m-p/5948669/highlight/true#M167289
I think that was helpful information in general, but it doesn't address why there would be a hard pull for a non-credit application. Most banks won't even do a soft pull for just a bank account, so why would some do a hard pull?

That was addressed to the purpose of a hard pull, to give notice to other creditors the credit was sought, although it addresses a lot of other issues discussed as well.

I see no valid reason for a bank to do a hard pull to open a checking account unless you are seeking overdraft protection. What bank is requiring this?

If you're not seeking an extension of credit, it's not something that I would like, but they could still say they have a permissible purpose because they are establishing a relationship with you. I don't think I would like that institution very much.

Re: Why do some banks and credit unions do a hard pull?

folks19 — Mon, 20 Jul 2020 19:44:54 GMT

@Anonymous wrote:
@folks19 wrote:
@Anonymous wrote:
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Inquiry-Master-Thread-understanding-inquiries-and-how-the-affect/m-p/5948669/highlight/true#M167289
I think that was helpful information in general, but it doesn't address why there would be a hard pull for a non-credit application. Most banks won't even do a soft pull for just a bank account, so why would some do a hard pull?
That was addressed to the purpose of a hard pull, to give notice to other creditors the credit was sought, although it addresses a lot of other issues discussed as well.

I see no valid reason for a bank to do a hard pull to open a checking account unless you are seeking overdraft protection. What bank is requiring this?

If you're not seeking an extension of credit, it's not something that I would like, but they could still say they have a permissible purpose because they are establishing a relationship with you. I don't think I would like that institution very much.

I agree 100%. I would NOT want to have a relationship with such a FI, so thats exactly why I decided to post this question (https://ficoforums.myfico.com/t5/Personal-Finance/Does-SDFCU-do-a-hard-pull-for-membership/m-p/6084766#M197043) after reading online that they do a HP for a savings account, before I flushed them doen the toilet. (Now that I got my answer, they are far down there.) I think SDFCU is a very good credit union, but I can't join until I fully understand shy they do a hard pull for a savings account!

Re: Why do some banks and credit unions do a hard pull?

Anonymous — Mon, 20 Jul 2020 20:08:06 GMT

Credit unions are much more likely to have a HP for all services policy. I think it's really just a way for them to let others know that you're opening new accounts of any kind. Just a warning for future reference, when opening an account with a CU, never do it unless you can take a HP. Some that didn't do HPs before may be doing them when you apply and vice versa. CUs are great but they all have quirks.

Re: Why do some banks and credit unions do a hard pull?

M_Smart007 — Mon, 20 Jul 2020 20:08:38 GMT

@Anonymous wrote:
@folks19 wrote:
@Anonymous wrote:
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Inquiry-Master-Thread-understanding-inquiries-and-how-the-affect/m-p/5948669/highlight/true#M167289
I think that was helpful information in general, but it doesn't address why there would be a hard pull for a non-credit application. Most banks won't even do a soft pull for just a bank account, so why would some do a hard pull?
That was addressed to the purpose of a hard pull, to give notice to other creditors the credit was sought, although it addresses a lot of other issues discussed as well.

I see no valid reason for a bank to do a hard pull to open a checking account unless you are seeking overdraft protection. What bank is requiring this?

If you're not seeking an extension of credit, it's not something that I would like, but they could still say they have a permissible purpose because they are establishing a relationship with you. I don't think I would like that institution very much.

I would not enjoy a HP just for a checking or savings account.

I can see if you are seeking credit products .. but for bank accounts

Re: Why do some banks and credit unions do a hard pull?

M_Smart007 — Mon, 20 Jul 2020 20:10:17 GMT

@randomguy1 wrote:
Just a note, some of these financial institutions only do a hard pull when you do not decline overdraft protection.

@randomguy1, Sure wish we had a master list of those!

Re: Why do some banks and credit unions do a hard pull?

Anonymous — Mon, 20 Jul 2020 20:14:43 GMT

You said bank..CUs, some conservative ones do HP, unfortunately...with those the pull is usually good for 30 days for other products,...so then you don't "waste" it, or at the same time.

Re: Why do some banks and credit unions do a hard pull?

folks19 — Mon, 20 Jul 2020 20:17:26 GMT

@Anonymous wrote:
Credit unions are much more likely to have a HP for all services policy. I think it's really just a way for them to let others know that you're opening new accounts of any kind. Just a warning for future reference, when opening an account with a CU, never do it unless you can take a HP. Some that didn't do HPs before may be doing them when you apply and vice versa. CUs are great but they all have quirks.

I realized that! That's why I'm trying to figure out here why that is??? Why should a credit union have such a policy? What's the logic of doing a hard pull for oppening a non-credit account? The same way there's no hard pull for opening a Facebook account, there shouldn't be a hard pull for a savings account. I'm joking about Facebook, but the point is that credit reports should be (and in general, THEY ARE) for credit purposes only. If someone is applying for an overdraft line of credit, then maybe a HP is appropreate, but for a savings account, or even a checking account, there's no need for a HP. And even if one is applying for a checking account (which can be overdraffed), there shouldn't be a hard pull because the person isn't "seeking credit". There are no evidence that one applying for a checking accounts is doing so for the potential credit involved, sho there's no need no "advertise" that the person is seeking credit because that simply is not true.

I think you understood that already, but I hope this explains the issue for others.