Application data deleted when denied?

[vanillabean]

Are there laws for whether new information provided to a credit card company must be removed at the time you have been turned down for the credit card in question?

[vanillabean]

120 views and no take on it? 

[takeshi74]

Views are just views.  Posting doesn't guarantee an answer.  I'm not a personal credit attorney and cannot weight in.  What are your specific concerns behind the question?

[RobertEG]

The FCRA refers to decline of credit as an "adverse action."   See FCRA 603(k).

The FCRA sets forth requirements in section 615 when they deny credit and have used a credit report as part of their adverse action.

The creditor must include, in their denial (adverse action)l letter, advisement to the consumer of their rights under FCRA 615(a) to send a copy of the denial letter to the respecitive CRA and obtain a free copy of their credit report from that CRA.

It is unclear as to what is meant by "new information provided to a credit card company."

Can you clarify?

The FCRA does not mandate the deletion of information unless it is either determined to be inaccurate or has been disputed and cannot be verified under the dipsute process. 

[vanillabean]

By “new information”, I mean data that the CCC didn’t know of prior to the application, whether the two parties have conducted other business together in the past or not. If the application is rejected, does the CCC have the right to store the application data for future use?

Since you brought up the CRAs, I wonder, aside from the obvious hard inquiry, whether they receive any further information from the CCC in the case of an application rejection; why would the CCC "send a copy of the denial letter to the respective CRA”? Also, is it the CCC or the applicant who is to "obtain a free copy of their credit report from that CRA”?

[vanillabean]

Bump!

[iv]

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@Anonymous-own-fico wrote:

By “new information”, I mean data that the CCC didn’t know of prior to the application, whether the two parties have conducted other business together in the past or not. If the application is rejected, does the CCC have the right to store the application data for future use?

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Yup. (Well, it's less "have the right to", and more "not barred by law from doing so".)

In general - personal information you choose to supply to a company can (and likely will) be stored for potential future analytic use.

There are various rules (although perhaps not as many as one might prefer) about sharing that information with other entities, but the US does not currently have something like the EU DPA, with the "right to erasure" or the "right to be forgotten".

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@Anonymous-own-fico wrote:

Since you brought up the CRAs, I wonder, aside from the obvious hard inquiry, whether they receive any further information from the CCC in the case of an application rejection; why would the CCC "send a copy of the denial letter to the respective CRA”?

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Generally speaking, creditors do not send, and the main CRAs do not store, information on denials.

I am not aware of any legal limit on doing so, however. (So it's certainly the kind of thing that a niche CRA could choose to do.)

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@Anonymous-own-fico wrote:

Also, is it the CCC or the applicant who is to "obtain a free copy of their credit report from that CRA”?

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The applicant.  By law, if you are denied credit due to a specific CRA report, you may request a copy of that report for free.

It needs to be from the CRA used for the denial, and only if the denial was because of the report (vs being due to income levels, or you being blacklisted by that creditor).

[RobertEG]

There are no laws requiring that a party who has obtained your credit report must purge their files of the credit report information if they deny the credit.

The FCRA stipulates that information obtained via a pull of a consumer's credti report may be used only for the stated permissible purpose provided to obtain the credit report, and no other.  Thus, they dont have to burn the copy of the credit report they obtained, but they are prohibited from disseminating or using it for other purposes.

How that might or might not be "policable" is a different issue........

If you have clear evidence that a creditor has disseminated information from your credit report to others for use outside of the specific purpose for which the credtior provided to the CRA when obtaining your report, you would have cause to bring civil action for violation of the FCRA.

[vanillabean]

Thank you very much for your replies! They were highly informative.