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Permissible purpose inquiry question.


tst888
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If I have an account with a lender can they just do an inquiry whenever they feel like it. I opened the account 9 months ago but they just did an inquiry recently for some unknown reason.

regardless.....I'm going to ask them to remove it but I would like to know if my being an client of theirs gives them lawful permissible purpose to do this inquiry.

thanks in advance for your help

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no, it's an installement loan, personal loan.

so they can just throw inquiries on there whenever they want? That seems a little ridiculous to me. I'm gonna ask them to remove it anyways and see if they are willing to cooperate with a good paying customer.

thanks for you response

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RN is correct. Although, they inquiries usually show up as soft pulls, not hard pulls (account reviews and such) but they do have the right to pull your credit at their discresion. I doubt you will get them to remove it, but you may be able to get them to change it to a soft pull.

These days, may creditors will monitor your report and if you are having payment history with another TL.. they will increase your interest rate. This is why it is important to stay on top of all of your credit line :)

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no, it's an installement loan, personal loan.

so they can just throw inquiries on there whenever they want? That seems a little ridiculous to me. I'm gonna ask them to remove it anyways and see if they are willing to cooperate with a good paying customer.

No. That is a closed end account. The terms of the agreement do not change. There is no purpose for an AR because they cannot increase or decrease your interest, cannot increase your credit limit, cannot change your payments or payment schedule and cannot alter the terms.

So long as you are not in default or delinquent, there is no PP.

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OH.. wow.. the additional post the OP posted was right about the time mine was, I missed that it was an installment loan. I was under the assumption that it was a CC.

I can see where Methuss and gdouglaslee are coming from, I am not so sure I agree.

under 604. Permissible purposes of consumer reports [15 U.S.C. § 1681b]

(F) otherwise has a legitimate business need for the information

(i) in connection with a business transaction that is initiated by the consumer; or

(ii) to review an account to determine whether the consumer continues to meet the terms of the account

It does not specify what time of account or exclude close ended accounts...

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Plenty of case law.

A Closed Account is a single transaction. For a car loan, there is permissible purpose once, at the beginning of the transaction when approval for financing takes place. After that, there is no permissible purpose. The amount borrowed is fixed, the interest rate is fixed, the payment amounts are fixed, and the term of the payments is fixed. None of those things changes, even if you default on other accounts, even if you open new accounts, even if you close other accounts, even if your utilization is too high. The only way to change those things that are fixed, is to enter into a new agreement or add an addendum to the old agreement. Closed accounts usually do not have accerlated payment clauses unless the account is in default. For those reasons, there is no PP for closed accounts.

That's very different from Open Accounts, which are a series of continuning transactions. Permissible purpose exists all the time. The amount owed is not fixed and always changes, the interest rate is not fixed and can change based on performance of the account or other accounts (the need for an AR), the payments are not fixed and can change and can be set higher based on performance of the account or other accounts (the need for an AR), the term of the payments varies greatly and may continue until one party or the other closes the account and pays off the balance. Open Accounts almost always have accererlated payment clauses and the account does not necessarily have to be delinquent or in default to demand accelerated payment. Poor performance on other accounts can result in a demand for accerlerated payment. That rarely happens, since usually the creditor lowers your credit limit or closes your account or increases your interest or minimum payment or a combination of those things.

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no, it's an installement loan, personal loan.

so they can just throw inquiries on there whenever they want? That seems a little ridiculous to me. I'm gonna ask them to remove it anyways and see if they are willing to cooperate with a good paying customer.

thanks for you response

To a reasonable point, there comes a time when it's considered poisoning someone’s credit, companies have been known to do this to reduce good credit rating and raise interest rates, the other trick is the missed or late payment during a refi, that causes a huge score hit, then walla they can hit you with higher interest’s rates. Just some things for consideration. What's funny is that they can do what are called promotional inquiries *and obtain the same exact information* which is a soft inquiry and does not cause any score hit. I've been trying to educate people with BOA about this, they seem like they need to learn it. Wells Fargo will at least do PR inquiries.

Collections agencies can try to use the permissible purposes clause as well, but if its a JDP and they truly have no business going any where near your reports you can ad that to the list when you sue them.

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  • 5 weeks later...

30 days has almost passed and no reply from them. I'm about to send another letter but in re-reading everyones posts I'm worried that I found where they may have PP. I did fall behind a couple of payments which is around the same time they did the inquiry. Although the inquiry is on TU and they only report to EX and EQ.

I'm current and paying now so even if I don't have legal grounds to force them to remove I'm hoping that maybe there's a chance they'll remove it anyways. (not holding breath though)

to be clear though.....my falling behind on the payments DOES give them PP even if it's an installment loan. Right ?

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Collections agencies can try to use the permissible purposes clause as well, but if its a JDP and they truly have no business going any where near your reports you can ad that to the list when you sue them.

I've wondered about that, and have seen case law that denied a CA PP for a hard inquiry, but opposing views here. I just went round 1 with NCO on this; they assumed a medical collection, and put a hard inquiry on my report. I argued it and demanded removal, and they responded:

"Please be advised that Going-To-Pay-For-My-Miata Hospital has placed the above account with our offices for collection and a copy of your credit report was obtained in conjunction therewith. As a result of this permissable purpose, we see no authority for removal of this inquiry."

Are they correct, or can I start round 2? :::I hope, I hope::

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