Your credit report is an important document that contains a summary of your financial history. Each financial action you take gets recorded, and it all goes into your credit report. From applying for credit cards, to making investments, to paying off loans, it’s all in your credit report.
But why is your credit report important? Future credit lenders access your credit report in order to help them make decisions on your future applications for loans, credit cards, or insurance. A good credit report and credit score can be extremely beneficial for getting good interest rates on loans, while a bad credit score could be detrimental.
However, not just anyone can access your credit report. In fact, Congress has passed legislation that creates a very specific set of situations in which someone can legally access your credit report. Limiting the number of inquiries about your credit is also important because having too many lender inquiries can hurt your credit score.
The Fair Credit Reporting Act (FCRA) was created in 1970 to protect consumers and their credit from unfair practices. The FCRA promotes accuracy, fairness, and privacy of the consumer and their information that is stored by federal credit reporting agencies. To do this, the FCRA regulates the collection, distribution, and use of consumer credit information.
One way that FCRA does this is by regulating who can have access to your credit report and under which circumstances. So what does the FCRA allow, and what breaks the rules?
Your credit report can only be accessed under a handful of circumstances. These can include:
Sometimes other personal information can also be accessed through a background check in other situations, such as applying for a concealed carry permit or applying for certain jobs.
In all of the situations above, when you apply or sign up, you provide personal information and the law allows the bank, landlord, or creditor to look into your credit report. At the bare minimum, this would include information such as your full name and social security number, but they may also ask for a spouse or partner’s name and social security number. By filling out the application and providing this information, you are consenting to allow the organization or individual to access your credit report when permitted by law.
Sometimes banks, landlords, insurance companies, or other entities do not follow the regulations laid out by the FCRA. Some situations may include:
These violations and other similar FCRA credit report violations are illegal and a violation of the FCRA’s privacy protections. In these situations, your rights are protected. If you know the individual or organization that violated the FCRA, such as a bank you already have an account with, you probably do not need to worry about identity theft, but you may still have an FCRA claim worth pursuing because someone pulled your credit report without a permissible purpose.
However, if you receive a notification that your credit report has been accessed, and you do not know the organization or individual, it may be an early sign of identity theft. If you believe you may be the victim of identity theft, you should take action immediately and find an identity theft attorney.
If someone violates your rights under the FCRA and accesses your credit report without your permission, you may have the right to legal damages so it is important to consult with an experienced FCRA attorney to understand your options.
The extent to which you can be compensated for an FCRA violation depends on the type of FCRA violation. These violations are classified as “negligent” or “willful.”
A negligent violation occurs when an individual or organization violates the FCRA because they are not carefully following the FCRA regulations, or because they behave in a way that does not meet their obligations under the statute.
Willful violations of the FCRA occur when an individual or organization acts in a way that is reckless or intentionally violates the law.
Both negligent and willful pulling of a consumer’s credit report can violate the FCRA but there are differences in what remedies are available:
The Financial Justice Initiative is a joint project between Terrell Marshall Law Group and Schlanger Law Group, two prominent law firms with extensive experience in consumer protection. If you believe that you have experienced an FCRA violation, do not hesitate to contact FJI.
