topic Re: 8 out of 10 credit unions do hard pulls on new members in Personal Finance

8 out of 10 credit unions do hard pulls on new members

pdxmike — Sat, 21 Jul 2018 00:39:02 GMT

I called the 10 biggest credit unions in my state, Oregon, and 8 of them said they do hard pulls on new members, even if you only open a deposit account with no overdraft protection. A few specifically said that they aren't checking creditworthiness and are just using it to identify new members, but they were clear that it was a hard pull and not a soft pull.

Everything I had read online said it was rare for banks and credit unions to do hard pulls for new members. Maybe standards are getting more strict?

Seven of the CUs pull Equifax, and another pulls Experian. I'm wondering, do hard pulls of this kind affect my score the same way a hard pull for a credit card would? Also, might the "rate shopping" algorithm apply, which treats multiple pulls as one for scoring purposes?

Re: 8 out of 10 credit unions do hard pulls on new members

Gmood1 — Sat, 21 Jul 2018 01:48:15 GMT

These are standard inqs and will count like any other. Inqs have very low impact. The only way to obtain most credit products is through a HP. Just a part of the game. After a year, they hold no weight.

Re: 8 out of 10 credit unions do hard pulls on new members

Anonymous — Sat, 21 Jul 2018 02:02:09 GMT

@pdxmike wrote:
I called the 10 biggest credit unions in my state, Oregon, and 8 of them said they do hard pulls on new members, even if you only open a deposit account with no overdraft protection. A few specifically said that they aren't checking creditworthiness and are just using it to identify new members, but they were clear that it was a hard pull and not a soft pull.

Everything I had read online said it was rare for banks and credit unions to do hard pulls for new members. Maybe standards are getting more strict?

Seven of the CUs pull Equifax, and another pulls Experian. I'm wondering, do hard pulls of this kind affect my score the same way a hard pull for a credit card would? Also, might the "rate shopping" algorithm apply, which treats multiple pulls as one for scoring purposes?

Credit unions are membership associations while most other financial institutions are not so they have differing standards for identifying and validating members/customers. Nothing has changed in that regard and credit unions aren't getting any stricter. Think of the hard pull as the cost of membership. And yes, the pull will affect your score the same as one for a credit product does.

The identification requirement is necessary to comply with Section 326 of the PATRIOT Act. This law requires all financial institutions to have a Customer Identification Program a.k.a. "know your customer." But the law also gives financial institutions discretion over what documents they can accept from customers as proof for identification purposes. So you will find some credit unions that will ask for copies of driver's license, social security number, and even proof of income before approving membership. Others will not ask for that much; and banks in general will rarely ask.

Re: 8 out of 10 credit unions do hard pulls on new members

pdxmike — Sat, 21 Jul 2018 03:22:44 GMT

Interesting. It seems to me that if they aren't extending new credit or checking creditworthiness (one CU specifically said they don't check the score, that it doesn't matter what's on the report) and they're just verifying your identity, then a soft pull would work just as well. I thought the point of a hard pull to inform other potential creditors that a borrower has been seeking new credit. I mean, why would it matter at all to creditors that you opened a savings account at a credit union a few months ago instead of at a bank where they don't pull your report?

Re: 8 out of 10 credit unions do hard pulls on new members

HeavenOhio — Sat, 21 Jul 2018 04:45:30 GMT

Charles Schwab Brokerage and Charles Schwab Bank will do hard pulls for one's first account on each "side" of the business, i.e. one pull for the brokerage side and another for banking. Pulls aren't necessary for second and subsequent accounts.

Re: 8 out of 10 credit unions do hard pulls on new members

Cookiegrabber — Sat, 21 Jul 2018 12:57:24 GMT

Most of them do Chex HPs as well, even just for membership savings. My Chex report learned the hard way.

Re: 8 out of 10 credit unions do hard pulls on new members

Anonymous — Sat, 21 Jul 2018 13:01:26 GMT

You have to give the credit union permission to do a hard pull; in effect you're telling them "Yes, I'm the person associated with this social security number and credit report. Go ahead and check." A soft pull doesn't give them that level of permission. Of course, it should also be noted that subsequent to the hard pull, the credit union could do routine soft pulls to see if you qualify for other products they market like life insurance, etc.).

@pdxmike wrote:
Interesting. It seems to me that if they aren't extending new credit or checking creditworthiness (one CU specifically said they don't check the score, that it doesn't matter what's on the report) and they're just verifying your identity, then a soft pull would work just as well. I thought the point of a hard pull to inform other potential creditors that a borrower has been seeking new credit. I mean, why would it matter at all to creditors that you opened a savings account at a credit union a few months ago instead of at a bank where they don't pull your report?

Re: 8 out of 10 credit unions do hard pulls on new members

SouthJamaica — Sat, 21 Jul 2018 13:32:38 GMT

@pdxmike wrote:
I called the 10 biggest credit unions in my state, Oregon, and 8 of them said they do hard pulls on new members, even if you only open a deposit account with no overdraft protection. A few specifically said that they aren't checking creditworthiness and are just using it to identify new members, but they were clear that it was a hard pull and not a soft pull.

Everything I had read online said it was rare for banks and credit unions to do hard pulls for new members. Maybe standards are getting more strict?

Seven of the CUs pull Equifax, and another pulls Experian. I'm wondering, do hard pulls of this kind affect my score the same way a hard pull for a credit card would? Also, might the "rate shopping" algorithm apply, which treats multiple pulls as one for scoring purposes?

If I want to avoid a hard pull for membership I email or message them and ask before applying.

BTW my experience has been much less than 8 in 10, more like half say yes and half say no.

Re: 8 out of 10 credit unions do hard pulls on new members

DaveInAZ — Sat, 21 Jul 2018 22:52:30 GMT

@pdxmike wrote:
Interesting. It seems to me that if they aren't extending new credit or checking creditworthiness (one CU specifically said they don't check the score, that it doesn't matter what's on the report) and they're just verifying your identity, then a soft pull would work just as well. I thought the point of a hard pull to inform other potential creditors that a borrower has been seeking new credit. I mean, why would it matter at all to creditors that you opened a savings account at a credit union a few months ago instead of at a bank where they don't pull your report?

They may well not check the score since it's not an app for credit, but if they tell you it doesn't matter what's on the report I don't think they're not being honest with you. For example, if your report has a bankruptcy filed but not yet discharged, or even a very recent discharged BK they will likely deny you. Or if you have a bunch of collections, repos, or foreclosures they will likely deny you, for the risk of having your accounts garnished. And I don't think they're being honest telling you a HP is just to verify your identity. Your credit report has your social security #, date of birth, and mailing address, but so does Chex system and Early Warning System (EWS), which almost every bank or CU use. And I've had credit unions want copies of my driver's license, Social Security Card and a utility bill even after pulling my credit report. And I've had a couple credit unions obviously use Lexis Nexis as they ask screening questions about an address, credit account, or car I had 10-20 years ago.

I think 8 out of 10 CUs requires a HP is high, I'd say about half. And I won't join a CU that requires a HP just to join, unless they'll use that same HP for a credit product.

Re: 8 out of 10 credit unions do hard pulls on new members

Revelate — Sun, 22 Jul 2018 00:11:03 GMT

Many CU's have required credit checks for identity purposes since I started on this forum at any rate, I'd put it at higher than 50% but that's just a gut feeling on my part.

To make a SP there has to be a business relationship typically, promotional / AR pulls have different cost structures and if you're establishing yourself with a new CU it is legimately a hard pull... I don't know why some are able to get away with SP's for membership but it might have to do with the contract they signed with the individual bureau in question.

Pulls can either be just report data, or report data + score(s)... base report pull is the cheapest of any of those options, scores have licensing costs to FICO or the bureaus (Vantage and custom ones).

I'd also be leery of accepting anything along the lines of "we don't look at the data at all" I can promise you that's not how financial institutions work, and I've been at several and that is universally true in my experience.

Re: 8 out of 10 credit unions do hard pulls on new members

Anonymous — Sun, 22 Jul 2018 19:23:39 GMT

Bottom line, I'd say the inquiry is worth it for what CU over versus regular Banks. So if having an extra one doesn't bother you, I'd say don't worry about it. If you're trying to keep them modest for some reason, them wait till it doesn't matter. Like I said, it's a small price to pay and is only temporary.

Re: 8 out of 10 credit unions do hard pulls on new members

Anonymous — Tue, 24 Jul 2018 15:28:42 GMT

@pdxmike wrote:
I called the 10 biggest credit unions in my state, Oregon, and 8 of them said they do hard pulls on new members, even if you only open a deposit account with no overdraft protection. A few specifically said that they aren't checking creditworthiness and are just using it to identify new members, but they were clear that it was a hard pull and not a soft pull.

Everything I had read online said it was rare for banks and credit unions to do hard pulls for new members. Maybe standards are getting more strict?

Seven of the CUs pull Equifax, and another pulls Experian. I'm wondering, do hard pulls of this kind affect my score the same way a hard pull for a credit card would? Also, might the "rate shopping" algorithm apply, which treats multiple pulls as one for scoring purposes?

when i joined WPCU, they asked, and when i agreed, initiated a hard pull, however, i THINK that pull was good for 60 days if i wanted to check into a low interested credit card or personal loan, which i did before the end of the time period. i was approved and it was actually a good thing. i didnt waste a pull since i was offered and got something with much better terms than some larger banks would offer.

Re: 8 out of 10 credit unions do hard pulls on new members

Anonymous — Tue, 24 Jul 2018 16:44:43 GMT

I've always been one for tighter credit union standards.

Bankruptcy within the last 7 years? No membership, sorry. Have a high debt/income ratio? Sorry.

Having a pool of members with good to excellent credit ratings means lower interest rates for all members. I'm not just talking about optional revolving credit cards... But personal loans, auto loans, lines of credit, mortgages, etc.

Re: 8 out of 10 credit unions do hard pulls on new members

Anonymous — Tue, 24 Jul 2018 17:53:19 GMT

My data point so far with CUs, 3 HPs and 4 SPs.