Oh sure, you expect a potential creditor to examine your credit report information when you apply for a car loan, mortgage, or new credit card. They always tell you if you’ve been approved or not.
You might even think it reasonable that current creditors periodically check your credit file to make sure you’re still a good credit risk.
But why in the world would anyone else want to invade your privacy? Who are these stealth interlopers and what is their agenda?
Here are 6 organizations that can legally pull your credit file, often without you even being aware:
Potential and Current Employers
Not all, but many, potential employers want to check the financial background of the people they’re considering for hire. This alone should be reason enough for everyone to repair their credit file, if needed, and keep it clean.
Imagine if a credit report revealed a criminal conviction, bankruptcy, or other financial problems. As a bank or jewelry store owner, wouldn’t you want to know that type of information? I would.
Current employers may also check your credit report. This might occur, for example, if you’re in line for promotion to a sensitive position. If your record discloses financial hardship and therefore makes you more susceptible to bribery or other criminal activity, you’ll likely get passed over. Or worse, fired.
State, Local, and Federal Government Agencies
Your credit report information could be reviewed if you apply for some sort of important government license. They may want to know if there’s anything about your personal finances that might shed a negative light or prevent you from fulfilling the licensing requirements.
State, Local, and Federal Courts
Your credit report information could be requested through a court ordered subpoena if you’re thought to be connected with suspected criminal activity.
A court may also want to look at your credit report if you’re involved in child support litigation, or other civil matters where knowledge about your finances is necessary.
Before an insurance company agrees to underwrite a business, personal, or other policy, they may want to verify your legitimacy, ability to make timely payments, etc. Heck, I discovered that my credit file was checked recently when I switched auto insurance carriers. But my sound credit also earned me their lowest rates.
Potential Business Investors
If you’re seeking investors for a business venture, they may be granted access to your credit report to ensure you’re not a scam artist.
If you stop making payments against an outstanding account, the creditor will eventually write the unpaid amount off their books. This is called a charge-off, write-off, or bad debt.
The creditor still wants that money. So they will hire a collections agency to go after you. Whatever money the collections agency is able to get, it will be split with the creditor. So these agencies have a vested interest in how and where you’re spending your money. Your credit report will give them a clue. And if your credit seems to be getting better, they’ll know you’re in a position to repay the past due amount.
How Your Credit Report Information Is Obtained
The first thing you should know about how and why all these organizations are able to gain access to your credit file is that it’s all perfectly legal. It’s spelled out in the Fair Credit Reporting Act (FCRA).
As mentioned above, sometimes it requires a court ordered subpoena to get your credit report. Other times you give permission by virtue of the fact that you’ve completed a credit or job application. Be sure to read the small print.
In other instances, a credit agency may simply grant someone access to your credit report if that person or organization provides proof that they have a vested interest in knowing about your credit background.
Now, there are scenarios where you have to be notified prior to your credit report being pulled.
For example, this would be the case if the job hiring process was being done primarily over the phone. Also, you are entitled to a copy of your credit report if a potential employer or creditor rejects your application because of your poor credit record.
The bottom-line is that your credit report information is very important. Clearly, bad marks can limit your opportunities and impede your ability to build wealth. This is why you should review your file annually, dispute any incorrect data, and pay your bills on time.