WASHINGTON (5/3/12)--Credit unions and others that use consumer reports must have a "permissible purpose" to obtain them according to the Fair Credit Reporting Act (FCRA), and Credit Union National Association (CUNA) Director of Compliance Information Valerie Moss has outlined the circumstances under which the FCRA allows a credit bureau to release a credit report to a credit union in the May issue of CUNA's Credit Union Magazine
In the article, Moss notes that credit unions may collect credit reports:
- When they are instructed by a consumer, in writing, to obtain their credit report;
- When a member applies for a new line of credit; and
- When they are needed for pre-employment research on a given job applicant.
The reports can also be collected to aid credit account reviews or collections. However, only active members' credit reports can be collected for this purpose.
Moss writes that the FCRA does not allow financial institutions to access credit reports for members with paid off or closed accounts. Credit unions with a legitimate business need for information may also collect credit reports provided they are used in connection with a business transaction that's initiated by the consumer, or to review an account to determine whether the consumer continues to meet the terms of the account.
Credit bureaus may furnish credit reports without a consumer's specific authorization if they are tied to loan applications, but many credit unions and other institutions still require their members to authorize the release of their credit report in these cases, according to Moss.
With the exception of prescreened solicitations, credit unions may not use credit reports to market products and services to their members, she added.
Other compliance articles are available in the latest issue of Credit Union Magazine
. For those articles, and more from the magazine, use the resource link.