Compliance Q&A: FCRA and Prescreened Credit Offers

July 7, 2010

Q Is a CU allowed to use previously obtained credit report information to make prescreened credit offers?

A No. Credit reports can only be obtained when the user has a “permissible purpose” under the Fair Credit Reporting Act (FCRA), for example, in connection with a credit application, or to review or collect on an existing account.  Marketing is not a permissible purpose under the act. 

The only exception to this prohibition involves making prescreened credit solicitations in accordance with the Federal Trade Commission’s FCRA prescreening regulations.

Prescreening typically involves obtaining from a credit bureau a list of consumers who meet the credit union’s pre-established lending criteria. The credit union then uses this list to develop a mailing list for the credit offer.