Dealerships and lenders can legally pull more than one credit report even if a customer's loan application authorizes only "a consumer credit report," a federal judge in Honolulu has ruled.
A dealership's order of multiple reports under such circumstances is a "permissible purpose" under the Fair Credit Reporting Act, U.S. District Judge J. Michael Seabright held.
As a result, Seabright dismissed an FCRA suit against Servco Auto Windward, a new-vehicle store that sells Toyotas and Suzukis in Kaneohe.
In February 2011, plaintiff Kermit Rydell signed a standard Hawaii Credit Application permitting Servco "to obtain a consumer credit report" in connection with financing a vehicle, according to the decision. Servco then obtained reports from TransUnion, Experian and Equifax.
Rydell's suit claimed that he'd authorized only one credit inquiry and that the additional two inquiries damaged his credit rating. The suit sought compensatory and punitive damages.
In granting Servco's request to throw out the suit, Seabright said that Rydell's loan application "contemplated that Servco could contact multiple lenders," as well as check his employment background and ask questions about his employment and credit history.
"Thus obtaining a single report from each of the major consumer credit agencies fits squarely within Servco's 'permissible purpose' under the FCRA," the judge said.
Rydell said there will be no appeal but, he said, "I still believe that my rights were violated and that my credit score will suffer."
He said he bought a new car elsewhere because Servco didn't offer enough on his trade-in. "At the new dealer, they checked two [credit reporting agencies], then the bank checked only one, which was all that was needed by anybody. That made for a total of six pulls of my credit report for one car," he said.
Dealership lawyer Lisa Gruebner of Honolulu said it is her client's policy not to comment on pending or resolved legal matters.