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Hardpull on credit for setting up autopay?

FeivelMouse49
New Visitor

Hardpull on credit for setting up autopay?

I am curious if this is a common practice with Chase, when setting up autopay for their credit cards.  (I haven't had this issue with any of my other credit cards.)  I decided to set up autopay for a Chase credit card.  As soon as I set it up, I received an email from Credit Karma that a hard inquiry had been made by Chase.  Why did they do a hard inquiry?  I'm really mad about this.  It lowered my score by 5 points.

 

Side note:  I just went into Credit Karma; now, it appears to be gone?  I'm really confused.

Message 1 of 10
9 REPLIES 9
simplynoir
Community Leader
Super Contributor

Re: Hardpull on credit for setting up autopay?


@FeivelMouse49 wrote:

 

Side note:  I just went into Credit Karma; now, it appears to be gone?  I'm really confused.


I was going to say any auto-pay setup should not result in a HP of any kind insofar as I know. Some banks and other vendors even encourage this with billing discounts and other small perks.

Message 2 of 10
CAS2019
Frequent Contributor

Re: Hardpull on credit for setting up autopay?

I setup autopay in Dec. with Chase, and I didn’t get any hardpulls.  If you just opened the account, it could be that the hard pull is just showing up now from the initial app and approval.  It was actually a month/month and a half before mine (hardpull) showed up.

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Message 3 of 10
BrutalBodyShots
Super Contributor

Re: Hardpull on credit for setting up autopay?

HPs are for when one requests credit or additional credit.  Setting up autopay does not constitute this, so a HP shouldn't happen.  If it did happen, I'd immediately contact the lender and tell them it needs to be removed.  It sounds like an error to me and I see no reason that any lender wouldn't promptly rectify the issue.

Message 4 of 10
SteelerNYC
Valued Contributor

Re: Hardpull on credit for setting up autopay?

I've seen some wonky stuff happen with CK alerts. If it's gone now, it was probably just a fluke.

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Message 5 of 10
corpcrmgr
Valued Contributor

Re: Hardpull on credit for setting up autopay?

Could CK be monitoring SP's?

Message 6 of 10
RobertEG
Legendary Contributor

Re: Hardpull on credit for setting up autopay?

Hard inquiries are not limited to requests for credit.

FCRA 604 provides permissible purpose for an inquiry if the consumer initiates a business transaction, and that business transaction has an associated, legitimate need for the business to review the consumer's credit as a part of evaluation of the business transaction.

Such inquiires can be coded either hard or soft, and there is no policy restriction that such inquiries cannot be hard.

See FCRA 604(a)(3)(F).

Typical examples are the application for utilities, cable, apartment rental, etc.

 

The permissibility of the inquiry would thus not be challenged on the basis that it is not related to a request for credit, but rather that the business transaction does not carry with it any legitimate business need to view the consumer's credit information as a part of approval of the autopay.   The business could assert that prior defaults in the consumer's credit history might affect their default on having adequate funds necessary to conduct autopay functions.  The consumer would need to assert that conduct of autopay would not have a legitimate connection to information shown in their credit report.

 

As an alternative to the legitimate business transaction permissible purpose, they may have used the separtate permissible purpose under section 604 of reviewing an existing account of the consumer (so-called internal account reviews).

If they had used that permissbile purpose as basis for their inquiry, then CRA coding makes any such inquiry a soft pull.

 

The FCRA requires that a party making any inquiry must either provide a specific authorization signed  by the consumer, or must provide a statment of their permissible purpose, which must be one or more of the purposes set forth under section 604.

Thus, the key to evaluating the legitimacy of their inquiry and of its coding of hard or soft is first to determine the permissbile purpose that accompanied their inquiry.

If it was for an internal account review, then there is clear basis for requring it to be coded as soft per CRA policy.

However, if their statement of permissible purpose was for a business transaction initiated by the consumer, then it would be necessary to show that setting up autopay involves no legitimate business need for them to review information in your credit history.  That would likely be a subjective argument, as they may contend that autopay might be a process that could result in a loss by them if the consumer does not have funds to cover an auto payment.........,

Message 7 of 10
800FICOGoal
Established Contributor

Re: Hardpull on credit for setting up autopay?

If FCRA can be interpreted that loosely, then just add this to the list of things that need adjusting. 










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Message 8 of 10
800FICOGoal
Established Contributor

Re: Hardpull on credit for setting up autopay?


@RobertEG wrote:

Hard inquiries are not limited to requests for credit.

FCRA 604 provides permissible purpose for an inquiry if the consumer initiates a business transaction, and that business transaction has an associated, legitimate need for the business to review the consumer's credit as a part of evaluation of the business transaction.

Such inquiires can be coded either hard or soft, and there is no policy restriction that such inquiries cannot be hard.

See FCRA 604(a)(3)(F).

Typical examples are the application for utilities, cable, apartment rental, etc.

 

 


All of which I believe should be restricted to soft pulls.










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Message 9 of 10
RobertEG
Legendary Contributor

Re: Hardpull on credit for setting up autopay?

There is no CRA poliicy or formal requirement that consumer initiated business transactions that have legitimate permissible purpose be coded as soft.  It is discretionary.

 

The CRAs have no publicly posted procedures or statement of policy as to exactly how certain inquiries can be coded as soft.

It is not covered in their standard credit reporting manual, the Credit Reporting Resource Guide, as credit inquiries are not the reporting of information to the CRAs.  They are just the opposite.... they are requests to see what others have reported.

 

With there being no published statement by the CRAs of when or how a given inquiry that is technically subject to be coded as hard can be subjectively coded as soft, such as request by the inquiree, it is a bit difficult to challenge the showing of a hard inquiry that you feel should be coded as soft.

It is one of those mysteries that remains in the CRA basement.......

Message 10 of 10
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