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Unfair Practices

53Jody
New Visitor

Unfair Practices

Do you think it is fair when consumers receive a hard inquiry for something they are required to have anyway? Examples: Utilities, phone, Internet services, etc?
Message 1 of 6
5 REPLIES 5
RobertEG
Legendary Contributor

Re: Unfair Practices

The pull of credit reports is not limited to credit transactions. It also applies to certain consumer-initiated business transactions.

 

The authorrization for a business to pull a consumer's credit report is set forth in FCRA 604 provided that the consumer has initiated a business transaction that involves the legitmate need for the business to evaluate the consumer's prior credit history as part of the business transaction.  In general, if the business transaction could lead to financial debt on the part of a consumer, it is normally considered a business transaction for which FCRA604 provides permissible purpose for obtaining a consumer's credit report.

Utiliites, rent, telecomm and internet services, banking accounts, etc., are all generally considered to be permissible business transactions that permit pull of a credit report.

 

Is it "fair" for a business to be able to assess a consumer's risk of payment of debt, or potential debt, obligation in determining whether to enter into a business transaction with the consumer?

Congress thinks so.......

 

 

Message 2 of 6
Medic981
Valued Contributor

Re: Unfair Practices

Welcome to the myFICO forums!

 


@53Jody wrote:
Do you think it is fair when consumers receive a hard inquiry for something they are required to have anyway? Examples: Utilities, phone, Internet services, etc?

How else would a company be able to determine your creditworthiness and whether they need the consumer to provide a deposit before providing services? The only hard inquiry I have had is when I moved and Comcast ran a credit check. Should it be a hard inquiry? That irks me as well, however, there is a benefit to the consumer. If you are using a credit monitoring service and someone does use your information to obtain services you will be alerted. A soft inquiry would not. A person could commit identity fraud and obtain utilities for years without you knowing until they failed to pay and then you would be left with cleaning up.

















Your FICO credit scores are not just numbers, it’s a skill.

Message 3 of 6
vntrsc
Frequent Contributor

Re: Unfair Practices

Unless I’m mistaken, I don’t believe one is required to have utilities, phone, and internet service. 

Message 4 of 6
kilroy8
Super Contributor

Re: Unfair Practices


@53Jody wrote:
Do you think it is fair when consumers receive a hard inquiry for something they are required to have anyway? Examples: Utilities, phone, Internet services, etc?

You can avoid this by paying a deposit up front. If you want to avoid a deposit, then they want to check your credit.

Message 5 of 6
RobertEG
Legendary Contributor

Re: Unfair Practices

The normal path to avoid scoring impact of permissible inquiries is to get them coded as soft.

 

The definition of a so-called soft inquiry is that it is not included in credit reports provided to anyone other than the named consumer, and thus are hidden from others, and do not affect scoring.

 

The CRAs permit thte coding of inquiries that have permissible purpose, and can be coded as hard, to alternately be coded as soft.

While the procedure is not formally published, they have codes permitting a business to obtain your full credit report, but avoid the inquiry be included in your credit report or in scoring.

Message 6 of 6
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