Help Clarify a Creditor's Inquiry Rights Please

[Anonymous]

I have read and read the letter of the law and also the forum and I cannot reconcile something in my mind that is bothering me and I am hoping you lovely people can give me some feedback to help me decide what to do next please.

I know that your current creditors are entitled to pull your report and do inquiry to evaluate your account. I have no objections to that or have any problems with that in principle and can see why it would be necessary and legitimate. However, is there any distinction to whether they can pull Hard or Soft?

Are they only allowed to soft pull for reviews which doesn't affect our score or can they screw with us in their almighty lack of consideration and do a hard pull which DOES hurt our score and stays on the report showing to everyone for 12 months?

The reason I ask, I got an updated Equifax report today and as if it wasn't bad enough that HSBC is screwing everyone over left and right, they just did a hard pull on my report for no reason that I can justify giving me a nice 12 point hit to my score. I can only imagine the others probably got hit too. Any ideas? Can I dispute this? Or am I just stuck having to deal with this bull because its quasi legal?

[haulingthescoreup]

I can't cite any rulings, but a hard inquiry is made in response to a request for credit. If you haven't asked for a new account, a CLI, or anything else that can be considered as a request for credit, then IMO they do not have PP (permissible purpose) to do a hard.

Perhaps they've laid off all but a half-dozen employees, and the ones who are left are clueless.

I'd get on the phone and raise holy hell.

By the way, this is why Chase can do a hard when a customer requests a CLI. It is technically a request for (more) credit.

[Anonymous]

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@haulingthescoreup wrote:
I can't cite any rulings, but a hard inquiry is made in response to a request for credit. If you haven't asked for a new account, a CLI, or anything else that can be considered as a request for credit, then IMO they do not have PP (permissible purpose) to do a hard.

Perhaps they've laid off all but a half-dozen employees, and the ones who are left are clueless.

I'd get on the phone and raise holy hell.

By the way, this is why Chase can do a hard when a customer requests a CLI. It is technically a request for (more) credit.

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I know I can always count on you, no I know about CLI requests and in that case I wouldn't even bring it up, of course that is more credit therefore they can justify that. I have not asked for any CLI with HSBC and why would I when they are being such crummy amatures about their practices. So I would be justified in raising hell but are they required to remove it? Will they be more likely to retaliate and cut the accounts instead? This is so frustrating.

A followup to that thought, about a month ago HSBC gave me a CLI on ONE of the accounts but I didn't ask for it. It was automatic. Can they hard pull me when I didn't ask for the CLI? Even though they DID give me a CLI? This is so frustrating that they don't know the heads from their asses.

[haulingthescoreup]

I'd call one of their backdoor numbers, during standard US working hours Monday through Friday, in order to increase your odds of getting a US-based rep. You'll probably have to escalate through the layers of CSR's until you find one with both gumption and authority, but I'm sure that laying on the tact and charm will make that a breeze.

But honestly, trying to find anyone at one of the beleaguered banks these days with intelligence and initiative can really wear you out.

Try doing a search here on PP permissible purpose to see if you can find a 2X4 to whack them over the head with. I'd especially look for posts by Timothy. He loved this sort of thing.

[Anonymous]

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@haulingthescoreup wrote:
I'd call one of their backdoor numbers, during standard US working hours Monday through Friday, in order to increase your odds of getting a US-based rep. You'll probably have to escalate through the layers of CSR's until you find one with both gumption and authority, but I'm sure that laying on the tact and charm will make that a breeze.

But honestly, trying to find anyone at one of the beleaguered banks these days with intelligence and initiative can really wear you out.

Try doing a search here on PP permissible purpose to see if you can find a 2X4 to whack them over the head with. I'd especially look for posts by Timothy. He loved this sort of thing.

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Tact and Charm huh? You trying to tell me something But yeah I get it, I know what you mean, will do. I guess make sure I am current on my cup of coffee, have taken my patience pill, remind myself karma is on my side and then give them a shot and see how it goes. Oh Timothy, love his posts, will do. Thanks alot, appreciate it as always.

[RobertEG]

Here is what the law says:

Distinction between hard and soft pulls. This is muddy water.

FCRA Section 604(a)(3) is a general authorization for a person to pull a CR for specified reasons.  It  makes no distinction between “hard” and “soft” pulls.  The pertinent sections are 604(a)(3)(A) and (F), which authorize a credit pull to a person who the CRA believes:

(A)  intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of the consumer; or

(F)               otherwise has a legitimate business need for the information
(i) in connection with a business transaction that is initiated by the consumer, or

(ii) to review an account to determine whether the consumer continues to meet the terms of the account.

So this broad authorization permits CR pulls for unsolicited offers for credit, whether or not initiated by the consumer (e.g., letters of solicitation for new credit), or review of consumer intiated applications for credit, or review of existing accounts or their collection.

 

Section 603(m) clarifies that the term “credit or insurance transaction that is not initiated by the consumer” does not include the use of a consumer report by a person with which the consumer has an account or insurance policy, for purpose of

(1)   reviewing the account of insurance policy, or

(2)   collecting the account. 

Section 604(c) of the FCRA then puts restrictive limitations on the extent of CR data that may be supplied by the CRA (so-called statutory “soft pulls”), depending only upon whether the consumer was considered to have “initiated” the inquiry The distinction is generally called the difference between a “hard” and a “soft” inquiry, although the statute does not use that terminology.  Section 604(c)(1) defines the legal distinction between a hard a and soft pull, and then section 604(c))(2  goes on to define  limitations on what can be obtained if it qualifies only as a soft pull. 

FCRA Section 604(c) reads as follows:

(1)   In general [hard pull].  A consumer reporting agency may furnish a consumer report relating to any an consumer pursuant to [604(3)(a)(3)] in connection with any credit transaction that is not initiated by the consumer only if

(A)  the consumer authorizes the agency to provide the report to such person; or

(B)   (i) the transaction consists of a firm offer of credit or insurance; and

(ii)  the consumer reporting agency has complied with subsection (e),
       to have the consumer’s name and address excluded from lists
       provided by the agency pursuant to this paragraph.

(2)   Limits on information received under paraqraph (1)(B).  [soft pull] A person may receive pursuant paragraph (1)(B) only (A) the name and address of the consumer; (B) an identifier that is not unique to the consumer…

 

So, the FCRA clearly states that a creditor may pull a full credit report for review of an existing account, and places no limitations on that inquiry.  However, the CRAs know that FICO does not want such inquiries ("soft puills") to affect consumer credit scoring.  So the CRAs have developed codes that identify the purpose of each inquiry.  There is a specific inquiry code for creditor review of an existing account.  When the FICO algorithm encounters such an inquiry code, it is excluded from FICO scoring.  Thus, it all depends upon proper report codes being provided to the CRA when an inquiry is made.  This is not regulated by any specific provision of the FCRA.

 

The abbreviated credit reports that you get from myFICO and other commercial vendors do not normally include the inquiry codes.  However, if you order your free annual credit report from annualcreditreport.com, they provide a full listing of all inquiries, along with the specific inquiry code entered for each.

[Junejer]

I have to throw in my $0.02 worth. The language in the law doesn't make a distinction between hard or soft. Creditors can, at their discretion, pull either hard or soft. In reality, every pull can be a soft, but lenders like to know who else is looking, thus the hard. There really is no distinction. I read those stupid statutes forward and backwards and couldn't find anything to make a distinction. So, in short, if they have PP, then a hard or soft is permissible.

Edit: RobertEG copied and pasted faster than I could type what I was wanting to say.

Message Edited by ByrdMan on 02-25-2009 10:47 PM

[RobertEG]

Byrd said it much more concisely than I.  The FCRA is not about credit scoring, it is about credit reporting, and the FCRA never distinquishes between hard and soft pullls for credit scoring purposes.

[Anonymous]

@RobertEG

Thank you for the information, I appreciate it. I looked at the same law and realized the muddy waters too and therefore the source of my frustration if you can imagine.

The report that I am looking at is an Equifax report direct from Equifax and the only ones coded with inquiry codes is the soft pull section. None of the hard pull items show a code. I tried pasting here for you to see but this stupid forum keeps telling me there is a 20,000 character limit. Ridiculous. Did I misunderstand you or missing something?

Look here at the entry that is bugging me, since I can't paste the whole things:

HOUSEHOLD CREDIT SERVICES 04/13/08

1111 N Town Center Dr
Las Vegas, NV 891446364

You know what I just realized, this is not recent so it can't be the CLI they gave me, so this is completely out of nowhere. HSBC, the problem that never stops giving.

[Anonymous]

@ByrdMan

Thanks for the two cents as always, I had the same problem, making the distinction in the law and why I reached out. However, what gives them the PP in this case? I mean I didn't ask them for any credit, no collection, no new application, no employement and so where does the PP factor?