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An expertly-staffed hotline, federal regulatory tools, policies and procedures, and unlimited reviews for small-to-medium community banks across the U.S. — the only all-inclusive banking compliance advisory. C/A’s nearly 1700 products and tools support 48 separate bank compliance areas –an unlimited-access Bank Compliance Library – conforms to the most recently published federal banking rules and regulations. Whether you are building institutional exam-readiness or a bank compliance program, C/A has all the resources, access, and availability for one membership subscription. Co-owned by the Virginia Bankers Association and 28 other state bankers associations across the country. Contact C/A’s Membership Development Team at (888) 353-3933 or at: info@compliancealliance.com. To learn more about C/A’s new Virtual Compliance Officer service or call (833) 683-0701.

Compliance Alliance Featured Q&A

Question:

We would like to start utilizing a “soft pull” of credit reports as part of the prequalification process. What do we need to be aware of with this practice?  

Answer:

Ultimately, the FCRA does not differentiate between a “soft” pull and a regular credit pull, – and so, in either event, the bank is ultimately required to have permissible purpose to pull credit – regardless of whether it is a “soft pull” or a “hard pull.” Considering this, the same general requirements for a hard pull would seem to apply to a soft pull, including the recommendation to obtain written authorization for the purposes of demonstrating permissible purpose. 

While it could be argued that an application to open an account may demonstrate permissible purpose, it should be noted that the regulators have been spotlighting permissible purpose issues as of late – and this could be doubly tenuous for those “prequalification’s” or inquiries that may not objectively rise to the level of an application; for those reasons, it is generally recommended to obtain an express authorization to pull credit in writing. Compliance Alliance’s Consumer Report Authorization Form may be as a starting point for this purpose. 

As always, regardless of if the bank elects to go with a soft pull or a hard pull, the bank will want to be sure to apply this procedure in a consistent manner to avoid implicating any potential UDAAP/UDAP and/or fair lending considerations. Compliance Alliance’s FCRA Toolkit offers several other tools addressing the FCRA’s general requirements.

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