The Fair Credit Reporting Act (FCRA) and some state credit reporting laws set forth the basic rules that protect your credit information. These laws allow only certain entities to gain access to your credit report in certain situations. They also restrict how your credit information can be used. Sometimes individuals and businesses pull your report when they have no legal basis to do so -- this is called having an impermissible purpose. Read on to learn who can and cannot look at your credit report, and some common scenarios when entities pull your report with an impermissible purpose.
(To learn more about the FCRA, see What Is the Fair Credit Reporting Act?)
Who Can Pull Your Credit Report
You might think that your credit report is private, so you may be surprised to learn that more than just your bank or creditor can get access to it. The FCRA (and some state laws) allow a fairly large class of people and businesses to pull your credit report if you have a current or potential relationship with them. These include the following:
- utility companies
- employers, and
- insurance companies.
For more information, see Who Can Look at Your Credit Report.
When Pulling a Credit Report Is Permissible and Impermissible
Just because the FCRA allows creditors, employers, landlords and others to pull your credit report does not give them, or anyone else, an open license to do so. In all instances, that entity must have what's called a “permissible purpose.” If it does not, then that entity must have your permission before pulling your credit report.
The FCRA lists the following as permissible purposes for pulling a credit report:
when you apply for credit, or when a creditor is reviewing or taking collection action on your existing account
when a potential creditor or insurer intends to extend you offers of credit or insurance (limited use)
when you apply for insurance
employment-related purposes (hiring and firing), only when you give that employer permission to do so
when a court or federal grand jury orders it
when you apply for certain government benefits or licenses that require a review of your financial background, and
when you initiate a business transaction and there is a “legitimate business need” for your credit report that relates to that deal.
If the person requesting your credit report does not have one of the “permissible purposes,” then your credit report is off limits. Period. If your neighbor, ex-girlfriend, co-worker, relative, or complete stranger pulls your credit report, you can be fairly certain that they probably violated the FCRA.
Where it gets tricky is when a potential creditor, employer, landlord, or other person that you have some colorable relationship with overreaches and grabs your report without having a permissible purpose.
Here are some common scenarios when an individual or other entity pulls your report without an impermissible purpose:
An employer pulls your credit report without asking your permission.
Someone looking to sue you for a non-credit account or for an involuntary debt -- as car towing and impound fees or breach of a real estate purchase agreement -- your credit report to find out if you have assets it can collect against.
Your creditor pulls your credit report after you discharged that debt in bankruptcy.
A tax collector, unless you have a payment agreement already in place or the information was subpoenaed . It is unclear if a tax collector can pull your credit report once it has obtained a tax lien, however.
Someone requests your report to use it as evidence against you in a divorce, criminal, personal injury, or other non-credit lawsuit or proceeding.
A landlord attempting to collect past-due rent, unless the landlord has obtained a judgment against you.
A credit card company pulls your report, but you were only an authorized user -- not an obligor -- that account.
Can Judgment Creditors Pull Your Report If the Original Debt Was Not the Result of a Credit Transaction?
The law is not altogether clear as to whether a judgment creditor can look at your credit report if the underlying debt was not a credit account. Prior to 2003, the FCRA did not define “credit.” So, judgment creditors on any type of debt were relatively safe in pulling credit reports if they intended to use the report for collection purposes.
Congress enacted the Fair and Accurate Credit Transaction Act (FACTA) in 2003. In FACTA, Congress defined "credit" as: "the right granted by a creditor to a debtor to defer payment of debt or to incur debts and defer its payment or to purchase property or services and defer payment therefore."
At least one federal court has applied FACTA's definition of credit to a FCRA case. In doing so, the court said that judgment creditors on debts that were not initially credit transactions cannot pull the debtor's credit report. Whether other courts will come to the same conclusion in the future is up in the air.
If you believe that somebody wrongfully pulled your credit report, you may be able to sue them in state or federal court for damages. Your state's laws may also offer additional relief and remedies. For more information, see Remedies for FCRA Violations.