Our credit card department would like to start offering a pre-approved credit card to those customers that have recently (within 30 days) been granted a loan through our indirect lending department. Since this is a new product offering for us, I need to make sure I've considered all of the complianec ramifications.

Do any of you offer these, and if so, can you offer advice on what I need to be concerned about?

Thanks!

I would be more concerned with safety and soundness. Just because someone qualifies for a loan that is secured credit, does not mean they automatically qualify for additional unsecured credit. Why would you even considering doing this blind?

Oh, what a minute - tell me they are going to first review the credit reports on the indirect loan to determine who gets the offer

You've got it!! I don't like it one little bit (and to be perfectly honest, I'd like to shut it down, but to be fair, I'd like to at least explore how they could make it work)

How did I guess?

They can't in this manner. They are using an existing credit report for marketing purposes, which means they have no permissible purpose, which means they are in violation of the FCRA and their contract with the credit reporting agency.

Download this document:

http://www.ftc.gov/os/2011/07/110720fcrareport.pdf

Start reading about half way down page 13. That section talks about using reports obtained for review purposes, but reports obtained to open a different account for the consumer is the exact same thing.

About the only thing available that would take into account someone's credit report, would to order prescreened lists from one of the reporting agencies. However, that has it's own risks, it's expensive and with little ultimate return in this day when every other piece of mail is a credit card offer.

Wonderful!! Exactly what I needed! Thank you!!

Let me ask you this...

If they are strictly looking at the credit score, but not the trade line details that made up the score, does the same criteria still stand?

Absolutely - a credit score is a credit report by definition.

Thought so...just needed the confirmation (getting the run-around!!)

You've been very helpful!

Thank you!