The Fair Credit Reporting Act (FCRA) is the federal law designed to protect your credit information and how it is reported. The established law permits only a limited amount of entities the access to individuals credit reports based on specific requirements.
You might think your credit report is relatively private. However, in most circumstances, there are a wide range of people who can legally access your credit information, such as:
- Utility companies,
- Employers and potential employers, and
- Insurance companies.
When an entity pulls your credit report without the legal basis to do so, would be considered as acting with impermissible purpose, which is a violation of the FCRA.
When Is Pulling A Credit Report Considered Permissible Purpose?
The FCRA has specific guidelines for situations in which a business and/or individual can pull your credit report. These instances include:
- When you want to increase your credit, the application will need to be verified against your report,
- When your account is reviews by a creditor, or if they take action on one of your existing accounts,
- When you are being offered a new line of credit or insurance,
- When you apply for insurance,
- When a federal court or grand jury requires it,
- Employment purposes (hiring or firing), but only when you have consented,
- When you apply for certain government benefits or licenses that require verification of your financial background and/or income, and
- When you start a business transaction, there is a "legitimate business need" for your credit report.
When Is Pulling A Credit Report Considered Impermissible Purposes?
If the interested party doesn't have a "permissible purpose", your credit should not be run. It can get complicated with a business, landlord, or creditor who had run your credit with permissible purposes in the past. Sometimes, these entities may “dip” back into your file and run your credit with impermissible purposes.
Some examples of businesses pulling your report for impermissible purposes are:
- A landlord attempting to collect past due rent cannot pull your credit report (unless they have filed a judgment against you).
- Someone looking to sue you for a non-credit-related instance or an involuntary debt, such as car towing fees, cannot run your credit.
- If a credit card company runs your report, but you were an authorized user, not an obligor.
- If someone requests and/or runs your credit to use it against you in a divorce, criminal, or another non-credit lawsuit, it would be an impermissible usage.
- If your creditor pulls your credit report after you have declared bankruptcy on that debt.
- A tax collector attempting to pull your report, except if: you already have a payment agreement in place, or the information pulled was subpoenaed
What To Do If You Think Someone Has Illegally Pulled Your Credit Report?
If you believe that somebody pulled your credit report for an impermissible purpose, you might be able to pursue legal action. You may be able to sue them in state or federal court for damages caused. Your state's laws may also offer additional protections and remedies.
Your credit report and financial history are private and personal. Entities should only pull this information with a clear permissible purpose. If you believe someone has pulled your credit report for an impressionable purpose, seek legal counsel.