We fully expect that lenders like credit card issues will have a credit check done prior to approving us for credit. But what about insurance companies or employers? You may be surprised by all of the agencies and business that are allowed to and are increasingly checking your credit report.
Both state credit reporting laws and the Fair Credit Reporting Act (FCRA) at the federal level restrict who is able to access your credit report as well as they ways that it can be used. The FCRA governs any agency or company who requests your credit report.
The entities and individuals who are able to ask for your credit report include the following:
Potential creditors and creditors (including car loan lenders and credit card issuers) are allowed to see your report whenever you apply for credit and for monitoring your credit after they have provided you with credit or a loan. Although this category is quite broad, there still are some restrictions to it as well. For new transactions, you need to have made an offer or initiated a credit transfer in order for a creditor to be allowed to view your report. When shopping around, it is very important for you to be careful, particularly when it comes to cars. Dealers will attempt to convince you to sign an authorization just so they can view your credit report and size your financial situation up prior to starting in on their sales pitch. That request goes onto your credit report and might negatively impact your credit report.
Mortgage lenders, who will very carefully scrutinize your credit report prior to agreeing to lend you money for purchasing a house. If you are looking to borrow at least $150,000, the lender will be provided with older information. So mortgage lenders frequently see information that other creditors don’t get access to.
Landlords, who might receive a report from one of the specialty consumer reporting agencies that tracks rental histories and evictions.
Utility companies may be able to ask for your credit report. However, frequently there are state rules preventing utility companies from being able to deny you service in certain situations, even when your credit is bad. Usually negative marks only matter when you owe money to the utility company you are seeking service from. Even then, usually utility companies must offer special payment programs and plans for low income individuals so that you get utility services that are affordable.
Student loan lenders. Federal loans as of July 1, 2010 are made by the government directly and private lenders do not offer them. In general, you may not be denied getting a direct federal student loan due to your credit worthiness. However, when parents apply for PLUS loans their credit is checked. You also may not obtain a new federal loan when you are in default on a current federal loan unless you make satisfactory arrangements for repaying it. However, private student loan lenders (loans from non-governmental entities) may use credit reports that relate to monitoring existing student loans or making new student loans.
Insurance companies are able to review your credit report when you apply for an insurance policy. They usually aren’t too interested in your credit history. However, they might inquire about any insurance claims you might have filed or your medical history. A credit reporting agency is not allowed to provided a credit report to an insurance company containing any of your medical information without your consent. If you are seeking to obtain life insurance of at least $150,000, the life insurance has the right to see older information that would not be included as part of your credit report otherwise.
Car insurance companies frequently use credit information for determining the amount to charge when they offer a policy to you. For example, GMAC Insurance reports that insurance rely on studies which show that there is a strong correlation between the financial history of a consumer and the likelihood in the future of potential insurance losses.
Employers. Credit reports are reviewed by thousands of employers as part of their process of evaluating job candidate. This information is used by employers to judge financial integrity and honesty, in addition to risk of bribery from individuals with high levels of debt. After you have been hired, the report can be used by employer for almost anything that relates to your job, including reassignment and promotion decisions. Prior to your credit report being ordered, first employers must get written authorization from you and provide you with certain disclosures. Many job applicants and employees are caught in a bind when it comes to deciding whether or not to authorize an employer from obtaining their credit reports.
If you say no, it might look like you have something hide or you might not get the job. On the other hand, if you say yes, but the employer doesn’t like what they see, you do have the right to review your credit report and if there are any inaccuracies dispute them before you are turned down for the job. (You are able to obtain a copy of your credit report when your employer does in some states.) However, what if your report is accurate? In this situation, the best that you will be able to do is claim that your past problems have been solved and have no bearing on what your job performance will be. However, also realize that many employers don’t review credit reports. Those who do frequently aren’t concerned about any financial problems you might have.
If your credit report does contain some negative information, you may want to speak with the employer about it prior to them seeing your report.
If you are applying for a job paying at least $75,000, then older information might be included in your credit report. If you allow an employer to review your credit report, it might include information that other entities won’t be able to see.
Government agencies are able to request your credit report in order to determine whether or not you are eligible for receiving public assistance. This is done in order to see if you have any hidden assets or income. They aren’t looking to see whether or not you have any unpaid bills. Local and state government officials are also allowed by law to obtain reports to help to determine whether or not, and how much, child support you can afford to pay, as long as you are given advance notice of 10 days. When applying for a license that a government agency issues, it may review your credit report if your financial status must be considered to determine your eligibility. However, your credit report is not looked at by all government agencies. For instance, district attorneys are not allowed to look at credit reports when investigating civil or criminal cases. Also, the U.S. Citizenship and Immigration Services (former INS) is not allowed to obtain a credit report for the purposes of reviewing citizenship applications or for any immigration proceeding. However, government agencies that are conducting international terrorism investigation may obtain credit reports. Government agencies may also obtain identifying information on you from credit reporting agencies, like your name, current and former addresses, current and former places of employment, even when there is no purpose that relates to child support, eligibility for services or credit.
Collection agencies are able to review your credit report when they are attempting to collect on a debt you are overdue on. The main reason why they do this is when they are trying to get more information on your assets or to find you.
Judgment creditors attempting to collect on a debt from a credit transaction that involves a regular creditor can review your credit report to determine whether or not collection efforts should be initiated against you.
They may use your credit report as well for locating your assets or you. There has been one court at least that has stated that individuals who don’t offer credit on a regular basis cannot obtain credit reports for trying to collect on a judgement. However, other courts disagree with this.
What that means is that individuals in some districts might be able to obtain a credit report for collecting on a judgement (for instance, a judgement for child support or alimony).
Entities with a court order. Even when a business, agency or individuals doesn’t have any other permissible reason for obtaining your credit report, it is is able to obtain a court order (which isn’t easy to do), may obtain your credit report. For instance, the IRS may get a summons so that it can access your credit report.
In general, you would receive notice and have an opportunity to oppose the court order request.
Apart from the those that were listed above, a majority of other businesses and individuals cannot request your credit report legally. For instance, your credit report cannot be used in immigration, child custody, divorce or other types of legal proceedings. Finding out if somebody who isn’t allowed to access your credit report has been able to request and receive it isn’t easy to determine. One way of detecting unauthorized users is ordering your credit report and then searching for unfamiliar businesses or names in the inquiries list.
If someone illegally requests your credit report, you might be able to sue them for violating the Fair Credit Reporting Act. Most likely you need a lawyer’s assistance to do this. In addition, you should complain to federal and state government agencies. The Fair Creditor Reporting Act is primarily enforced by the Federal Trade Commission (FTC). (You may file a complaint or contact the FTC at www.ftc.gov). The FTC most likely won’t handle your case on its own, other than contacting the entity to find out if they will address your complaint, however if there are enough complaints against the same company, the FTC might investigate and then take action in order to stop the company and perhaps obtain money for the victims.