You Might Be Surprised At Who Reviews Credit Reports

By: Urbain Beck

Need a loan? Want to apply for a credit card? Or thinking about getting a new car financed? It's no surprise that any lender or business that gives you a line of credit is going to check out your credit report first.

But here's the rub. Your credit score goes beyond loan approval. It can affect other areas of life. For that reason, it's a good idea to make sure that your credit score is as high as you can get it.

For example, let's say that you had a rough spell that damaged your credit. You're trying to get a job to clean things up. Unfortunately, you might find yourself between the proverbial rock and hard spot because your credit score might affect your ability to get a job. Many potential employers review your credit report to determine if you are a responsible person and how you handle money.

If you are looking at a home or apartment to rent, the landlord might evaluate your credit report to decide whether you will be a responsible tenant. Because the score theoretically reflects your ability to make monthly payments, the landlord might decline your rental application if he or she thinks that you will be unlikely to pay your monthly lease.

Your ability to obtain home, renters, health or other types of insurance might also be affected by your credit report, depending on the policies of the underwriter. More underwriters these days are checking out credit reports before accepting insurance applications.

Who Is Allowed to Look At Credit Reports?

In most cases, under the Fair Credit Reporting Act (FCRA), you must first grant permission to landlords and businesses who want to review your report. There are exceptions, however. A common exception is that your current creditors can review your report periodically without asking for your consent. Generally, businesses, lenders, government agencies and others can review your credit profile without asking you if their review is for what is called permissible purposes.

These permissible purposes in which your credit report can be supplied are defined under FCRA. Not always with your consent, a credit report may be supplied if:

... the report is used for credit granting considerations;
... the credit report is used for the review or collection of an account;
... the report will be used for employment considerations;
... the credit report is used for insurance underwriting;
... an application for a government license has been made;
... the credit report will be used in response to a court order;
... you have provided written permission for a business to review your report;
... the credit report is used for FBI counterintelligence investigations.

You might receive a lot of pre-approved credit card offers in which the potential lender has already reviewed your report without your knowledge and pre-approved it. These types of reviews would fall under the credit granting considerations and would be considered a permissible use of your credit report.

Most inquiries about your credit score will stay on your report for up to two years, and may adversely impact your score. However, like most of the reviews that you did not specifically authorize, the inquiries from lenders who want to offer you pre-approved credit do not appear on your report and will not adversely affect your score.

Unless a person or entity is reviewing your credit report for a permissible use, they should not have access to your credit file. Anyone who knowingly and willfully obtains a credit report under false pretenses may be fined under Title 18 of the United States Code and imprisoned up to two years. If you see any suspicious activity about who is reviewing your credit report, be sure to contact the credit bureaus immediately.

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