![]() ![]() In our example, if a consumer’s credit score has dropped below 640 by the time the consumer responds to the creditor’s firm offer solicitation, the creditor may deny the consumer’s credit application. The creditor is entitled to verify that the consumer continues to meet the specific criteria the creditor established when it obtained the prescreened list. This is not to say the creditor has to approve and grant credit to every consumer who responds to the creditor’s firm offer solicitation. A creditor that receives the prescreened list but does not make a qualifying firm offer of credit to each consumer on the list will not have a permissible purpose for obtaining consumer report information, which violates the FCRA. The creditor’s firm offer solicitation must include specific disclosures and use specific formatting, to explain the consumer’s right to opt-out of future prescreened offers through the CRA, and explain key conditions that apply to the creditor’s firm offer. The FCRA then requires the creditor to make a firm offer of credit to each consumer on the prescreened list and, when they respond, apply the same criteria the creditor established before it obtained the prescreened list from the CRA. If the consumer has not exercised their right to be removed from prescreened lists, the CRA will provide the creditor with limited consumer report information by providing the name and contact information for each consumer who met some or all of the creditor’s advance criteria. The creditor can then ask a CRA for a prescreened list of consumers who appear to satisfy that criteria, based on information the CRA knows when it prepares the list (for example, credit scores and no reported delinquencies, but not the consumer’s income).Ĭonsumers who do not want to receive prescreened “firm offers” of credit or insurance are allowed to give opt-out instructions directly to the CRA. Operationally, the creditor must establish certain consumer criteria in advance that it will require before the consumer can qualify for the creditor’s “firm offer” of credit (for example, a minimum credit score of 640, no delinquent accounts, and a minimum income amount). Under this provision, the FCRA allows a creditor to obtain limited consumer report information from a consumer reporting agency (CRA) in the form of a prescreened list for marketing purposes, so long as the creditor makes a firm offer of credit to each consumer on the list. However, a transaction that consists of a firm offer of credit, provides a key exception to the general rule that requires a consumer-initiated event. In most cases, the consumer initiates the transaction that will give the creditor its permissible purpose. No one may use or obtain a consumer report for any purpose except those expressly permitted by the FCRA. The permissible purpose analysis for pulling consumer credit information must focus on why and how the creditor obtains that information. Do they apply when the creditor makes a prequalified offer? Does that change if the creditor makes a prescreened or preapproved offer? What is the difference between these terms?! The answer comes down to two words – permissible purpose. Creditors often ask when the Fair Credit Reporting Act’s (FCRA) rules relating to firm offers of credit apply.
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