Can a bank hard pull for reinstating a card?

Anonymous · ‎02-19-2021

Hello, fellow FICO geeks : )

At a place, I have encountered a customer whose pers. guaranteed small biz credit card was closed by grantor.. for AA reasons

When the customer and banker called in to request to reopen the account, it was successful. But the customer noticed a HP after.

Is the HP allowed?

I'm thinking it is most likely, as that's essentially a new extension of credit + biz CCs are less regulated than personal. Also, isn't there typically a consent to the banks to continue monitoring credit and financial profiles throughout the relationship? I think HPs are included.

Maybe there was a lack of communication and the customer either didn't consent to a HP, or rushed through the call and agreed to it unwittingly.

I'm hearing conflicted opinions, so wondering what some here may think.

Thoughts?

thornback · ‎02-19-2021

Yes. It's common to receive a hp for reopening an account. An account closed by the lender as a form of AA would reasonably require current review of the consumer’s credit reports to make a decision to re-open and re-extend credit.

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RobertEG · ‎02-19-2021

Closing a card is the termination of extension of further credit to the consumer.

A request by the consumer to then reopen the account is a request for extension of credit.

FCRA 604(a)(3)(A) provides permissible purpose for pull of a credit report under those conditions.

Even if the reason was considered not to be for extension of credit, FCRA 604(a)(3)(F) provides as permissble purpose any business transaction initiated by the consumer that has a legitimate business need to review the consumer's credit history. Such business transactions do not require that they relate specifically to the extension of credit.

The post states that the request for reopening was initiated by the consumer, and was thus a business transaction qualifying under subsection 604(a)(3)(F) apart from any issue of whether reopening qualifies as a "request for extension of credit."

Anonymous · ‎02-20-2021

@RobertEG

Thanks

Turns out the customer did knowingly consent to a HP, and is just upset after the fact feeling as if that was the only option to reinstate account