Credit reports and inquiries

[Dewey]

What is the name of your state (only U.S. law)? AZ

I understand that your current creditors can run credit reports on you. Usually called "soft pulls" if I understood correctly. This makes sense with revolving credit since they can adjust your interest rate, the amount they're willling to loan you, etc. based on your credit profile at the time of the inquiry.

My question is--Are your other creditors, the ones that do not extend revolving credit, such as your mortgage, justified to make inquiries?

[georgeharrison]

Originally Posted by Dewey

What is the name of your state (only U.S. law)? AZ

I understand that your current creditors can run credit reports on you. Usually called "soft pulls" if I understood correctly. This makes sense with revolving credit since they can adjust your interest rate, the amount they're willling to loan you, etc. based on your credit profile at the time of the inquiry.

My question is--Are your other creditors, the ones that do not extend revolving credit, such as your mortgage, justified to make inquiries?

Yes,to make inquiries.

[Dewey]

Actually I found the answer to my own question. It appears that they are NOT justified making any inquiries (permissible purpose):

Another little-known fact is that inquiries related to closed-end transactions, such as mortgages and car loans, where the terms of the account are not likely to be changed based upon an account review, are not permissible. The FTC opined in the Gowan letter that...

"Like creditors, banks and others may need to consult a consumer's report in order to determine whether the consumer's current account terms should be modified. For example, the institution may provide more favorable pricing terms after consulting the report. The permissible purpose created by this provision, however, is limited to an account review for the purpose of deciding whether to retain or modify current account terms. (emphasis added).

The terms of a closed-end credit transaction are predetermined and generally may not be changed unilaterally by the creditor unless the contract expressly provides for such action (e.g., in the event of default). Therefore, the creditor is unlikely to have a reason to consider "whether to retain or modify current account terms" and, thus, would not have any routine need to procure consumer reports to "review" its accounts."