Can a bank pull my credit report without notifying me?

Question

My LLC has a small investment loan for a multi-family property through a local credit union. Last week, I was notified through a credit monitoring service that the lender pulled my personal credit report.

I asked the banker about it and got this response: "We have to pull credit at least once a year when we do the annual review.  The annual review is to help determine if there is any adverse changes in the financial condition of to borrow and guarantor.  If there is then we need to look at what is causing the changes and possibly recommend some changes to help."

The loan payment has always been made before the due date and is in good standing. Is what they did legal? I've never had this happen on any loan.

Matt Devincenzo · Answer

Annual audits and reviews aren't uncommon in commercial or personal banking type scenarios where a large part of your credit worthiness is influenced by 'who' you are. It allows the bank to hopefully extend the credit a bit more freely knowing they are able to review and minimize their future risks every year. Otherwise they need to be more strict to ensure they mitigate the loan losses from life circumstance changes etc. It's another one of those areas where the 'consumer' side of things it is very uncommon, but in other commercial/professional areas it's much more common.

Jonathan R McLaughlin · Answer

@Leigh S. I can promise you the requirement to do so was in the paperwork you signed. Very common—some may do it once a year and/or when u are going to purchase another property

Leigh S. · Answer

Thanks for the insight. This makes a lot of sense! I definitely feel better about the situation. I'd just never run across this, so was taken aback.

Leigh S. · Answer

@John Leake, it's a local bank. I like them better, for sure. My first time using them, so maybe they just don't know me well enough yet.

John Leake · Answer

@Leigh S. Now that I think about it since switching to my current lender I have purchased something every year so they wouldn't need to ask to run my credit. As I'm requesting funding and that's part of the process. Actually the last deal was low enough purchase price they didn't ask for anything. I will have to ask that next time I talk to my lender. Is this a bank local to you? I know small banks tend to be a little more on top of things.

Leigh S. · Answer

@John Leake, I thought it was odd. They also asked for my 2020 tax returns.  All part of their "annual audit". Anyway, my credit outstanding and nothing to hide in the returns. I'm just offended and frankly a little perplexed.

John Leake · Answer

I do believe that provisions can be added into a contract for a loan that allows them to do this you'll want to check your paperwork to see if what you signed also gave them permission moving forward. I also think FCRA has the provision in there to review an account you already have opened. I would be a little bothered as well by the inquiry especially with the information you have provided that everything is current and payments are always early. I would be interested to hear a lender or lawyer weigh in on this.

Can a bank pull my credit report without notifying me?

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