Credit inquiries, “soft-pulls” v. “hard-pulls,” and the Fair Credit Reporting Act

September 29, 2021by Cheryl Gernand


There is a lot of disinformation about pulling credit reports out there—primarily initiated and promoted by the plaintiff’s bar. I want to take a moment to add some clarity.

The Fair Credit Reporting Act (FCRA) is very clear as to the permissible purposes of obtaining consumer reports. Section 604 of the FCRA sets forth the permissible purposes. That is, these are the reasons that a consumer reporting agency (CRA) may provide consumer reports to a creditor. Section 604(a)(3) is the most instructive provision for our purposes. Paragraph (3)(A) states that a CRA may furnish a consumer report to creditors:

  • who intend to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer [emphasis added].

Section 604(a)(3)(F) then adds:

  • that a CRA may furnish information for the purpose of review of an account to determine whether the consumer continues to meet the terms of the account.

The FCRA does not require the consumer’s consent to either of these actions. This fact is too often overlooked by plaintiff’s lawyers.

Further, nothing in the FCRA addresses “soft-pulls” v. “hard-pulls.” However, soft-pulls has become a term of art applicable to pre-qualifying consumers for loan offers by creditors. The various CRAs have developed programs that afford creditors the opportunity to purchase soft-pulls in connection with guaranteed offers of credit.

However, these soft-pulls are not Section 604(a)(3)(A) or (F) credit inquiries. And, as long as the creditor is (i) considering an extension of credit at the request of the consumer, or (ii) reviewing or collecting an existing consumer account, no specific permission of the consumer is required for a consumer report. That is, these types of inquiries are permissible without consumer consent.

Having said this, it is still good policy and practice for creditors to advise consumers of their intention to pull a consumer report in making the decision to extend credit; and to advise the consumer that his or her credit report may be reviewed from time to time in connection with the review or collection of an account. Often, this “warning” is included as a part of the credit application. However, this warning is not required.

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