The credit card department recently pulled a refresh on all of the consumer accounts for a current credit score. They have decided to close some of these accounts because the credit score falls below the bank's allowed threshold. I told them that since they were taking adverse action based on a credit score they had to disclose the score, the key factors, etc required by 609(f)(1) of the FCRA.

The credit card department is telling me this is a problem, as they don't get an actual credit report. They just get the score, so wouldn't be able to give key factors, or even specific reasons as to why adverse action was taken. Just that the score was too low.

I think this is a problem! Any advice?

They have a problem as they also are required to send a Reg. B AAN notice with specific reasons. Reference to the credit score not meeting standards is not an acceptable reason.

This was not a well conceived action without consideration of what action might be required. Also, according to the FTC: "
Staff believes that the “review” permissible purpose applies only where the creditor has an existing account relationship with the consumer and uses the report solely to decide whether to modify the terms of the account." If there was no criteria established prior to pulling the credit scores for modification of the accounts, they had no permissible purpose.

Interesting Randy. I knew the issue with the Reg B specific reasons, I didn't consider the fact that they may not have had a permissible purpose.

Thank you!

Since these are open-end credits I would have to opine they had a permissible purpose for doing an account review. However I agree with Randy there is an issue because no criteria was established for using the information obtained.

Now with that said I would question if only obtaining a credit score would constitute an account review. You can't really review a borrower's current status based solely on a credit score.

As Randy stated this action was ill conceived.

I also agree that it was ill conceived. They are telling me that "pulling soft hit credit reports on an open ended credit card relationship is common industry practice for account management purposes."

I still think if they take adverse action based on these "soft hit" credit reports, the customer is owed a notice with specific reasons.

I still think if they take adverse action based on these "soft hit" credit reports, the customer is owed a notice with specific reasons.

Absolutely. Also, there is no such thing as a "soft pull" defined in the FCRA. They are credit reports.

Ask to see the information they received. The last time we did a "soft pull" the main factors that negatively impacted the credit score were in the report, the receiver just didn't know how to read the report.

It may be there, but they just don't know what all the codes mean, which can be easily obtained from the user guide (or possibly attached to the email).