Dear Dr. Don,
After reading your recent article about some banks doing a “hard pull” when you invest in a CD, I have a question: What possible information could a bank need/want from a credit report that would affect the bank’s willingness to accept an investor’s money? They have no risk.
— Dan Depositor
Dear Dan,
I’m with you. I don’t see why a bank has to do a hard pull, or inquiry, on your credit report when you open a deposit account.
An inquiry means the bank has reviewed your credit as a prospective borrower. An inquiry stays on your credit report for two years but only factors into your credit score in the first year. A single inquiry won’t have a big impact on your credit score but multiple inquiries can hurt your score.
The deposit side has its own type of consumer report to check on your bank account history. The big name in banking consumer reports is ChexSystems. You’re entitled to a free copy of your ChexSystems report annually, just like the free annual credit reports that are available to you. Order yours at the ChexSystems Web site.
The best motivation I can think of for banks to do a hard pull on your credit is that they’re so interested in cross-selling that they want to prequalify their banking customers for credit offers. While banks have the ability to do a soft pull on your credit report and that gives them the chance to review your credit report without impacting your credit score, a hard pull does impact your credit score.
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