Does anyone charge for the cost of a credit report on prequalification requests?

To recoup the cost of pulling credit on online applicants that never follow-up with a complete application, management proposes that we collect autorization to pull credit and charge a credit card as a part of the prequal request process.

What if the applicant does not provide credit card info for assessing the fee? Can we deny the request for that reason (and send an AAN?) Or would that be considered discouraging an application? Please help!

We do tons of pre-quals....and don't charge for the report. Doing that is counter-productive in my opinion because consumers will go apply everywhere else........where no charge is required.

Good point, though I'm responsible for explaining the compliance implications/risks of the proposed solution. Any help there?

.... aside from the major discussion we had this week regarding the pulling of credit reports for prequalifications.

(4) The lender is not permitted to charge, as a condition for providing a GFE, any fee for an appraisal, inspection, or other similar settlement service. The lender may, at its option, charge a fee limited to the cost of a credit report. The lender may not charge additional fees until after the applicant has received the GFE and indicated an intention to proceed with the loan covered by that GFE. If the GFE is mailed to the applicant, the applicant is considered to have received the GFE 3 calendar days after it is mailed, not including Sundays and the legal public holidays specified in 5 U.S.C. 6103(a).

No fee other than the credit report fee will be charged. All others will wait until the GFE has been issued and intent to proceed received.

Correct. I should have explained that better but it appears you got the point. Since on prequalifications you would not be issuing a GFE, with the pulling of the credit report, this should be sufficient.

Thank you. So assessing the charge itself is acceptable.

What if the applicant does not provide credit card info for assessing the fee? Can we deny the request for that reason (and send an AAN?) Or would that be considered discouraging an application (we do consider these applications under Reg B given our prequal process)?

There's no clear cut answer to this because, as Red pointed out there's a whole other aspect of whether you can and/or should pull a cbr as part of a prequal. Read this for more information.

We treat cbr on prequal as a cost of doing business. The minimumal cost is not worth the effort to collect or the chance of alienating an applicant.