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A question about inquires

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Anonymous
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Re: A question about inquires


We had a long thread a year or two ago in which I asked why a particular creditor would do hard pulls at all, given that typically the creditor has something to gain by not making his customer angry.  How does it help that particular creditor in that instance to aggravate his current or potential customer by doing the hard pull -- when he can get the same info by doing the soft pull?

 

What most people would say is that the hard pull helps alert other creditors -- but that in a way intensifies the puzzle rather than resolving it.  Why would Bank of America want to help out Chase?  Again, we tended to hear as a response, "yeah but if everybody thought that way, then we wouldn't find out about any credit apps" which doesn't address the almost Darwinian importance of the event as it occurs in time.  If you give people the option to pay taxes, then we should expect that almost no particular individual would pay, even though we can show that if everybody thinks that way it will cause our nation to collapse.  Likewise, since individual creditors have an option to do a soft pull, their decision for each pull should be dominated by the desire not to offend a current or potential customer.

 

I had originally guessed at the time that there must be some kind of federal or CRA guidance that forced creditors to do hard pulls for all new accounts, but that turned out not to be true, if I remember right.  No one is forcing creditors to do hard pulls, but they all somehow do them anyway (except for CLIs, credit union memberships, and SS loans, about which there is a wide diversity of practice -- again with no discernable pattern or rationale).

 

All interesting stuff to be sure.


Hey there CGID!  I tend to think of it sort of as a system of checks and balances.  Yes one lender may be "helping" out others by giving their own potential customer a HP, but in turn by doing so the expectation is that those other lenders that they're "helping" will return the favor; They will then administer HPs for apps to their institution.  Rather than everyone be blind to whether or not an individual has been seeking credit, I think the consensus would be that it's a better thing to be in the know rather than not.  Since it's more or less an expectation to receive a HP for seeking credit, I don't think that many feel offended by it.  I sort of like the system of checks and balances.  Can you imagine if we didn't receive HPs how many crazy sprees people would go on?  Definitely interesting stuff to ponder, as you suggested previously.

Message 11 of 12
RobertEG
Legendary Contributor

Re: A question about inquires

While some creditors may have reason to code consumer initiated requests for credit as soft, I would argue that the focus should not be on their reasons, but rather on the reasons why others ordering credit reports shoould be denied that information, and on whether the CRAs are justified in such subjective exclusion of otherwise reportable inquries from their credit reports.

 

The public interest is determined by congress, who has mandated in FCRA 607(b) that “whenever a credit reporting agency prepares a consumer report, it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.”

When a party orders a credit report and/or score from a CRA, they have the right to assume the report reasonably includes the maximum possible accuracy of information recorded in the CRA file.

The CRA knows at the time of the inquiry that a prior credit inquiry was made by another, such as for the relevant purpose of evaluating a consumer-initiated request for credit, and yet choses to omit that information from their credit report if the prior inquire instructed them to do so by coding their inquiry as “soft.”  That is an arbitrary lack of inclusion of the information without any reasonable basis.

 

Contrasting that subjective lack of inclusion of the information from their other policies regarding completeness of their credit reports, the CRAs go so far as to establish a formal policy instructing furnishers not to delete prior reporting of derogatory information based on consumer payment of a debt.

 

The CRAs regularly permit coding and recoding of inquries as soft without any published procedures to define when such inquiries have basis for exclusion from their credit reports.  Inquiries based on a consumer inititated request for credit clearly are of recognized interest to others, as evidenced by their inclusion in credit scoring models.  And yet the CRAs permit their exclusion from credit reports without any reasonable procedures, with only a coding or recoding instruction from the inquiree.

That does not appear to be in compliance with their reporting mandate under FCRA 607(b).  At least it lacks explanation of why it is not.....

Message 12 of 12
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