The federal Fair Credit Reporting Act (FCRA) and state credit reporting laws restrict who can access your credit report and how it can be used.
You may be surprised to know that, even if you’re not borrowing money, certain companies or individuals may be looking at your credit report.
- Landlords. If you apply for an apartment or other house rental, your landlord will likely get a report from a specialty consumer reporting agency that tracks rental histories, including evictions.
Renting a place to live is a long-term agreement, and many landlords want to make sure you’re a good candidate or paying your rent on time, and won’t cause trouble or property damage.
And while rent is not typically reported to the credit bureaus, your credit report provides the overall likelihood that you will pay your bills on time and are financially responsible.
If your credit score is low, you may be denied the rental or in some cases, have to provide a larger security deposit.
- Utilities. If you’ve moved and need to open a new utility account or switch service, many utility companies will check your credit.
Utility bills like water, gas and electricity are usually paid the month after you’ve used the service so the companies want to get an idea of your fiscal responsibility before opening your account.
It’s important to note that most states prevent utility companies from denying you service in many circumstances, even if you have bad credit. However, utility companies can charge you an upfront deposit before starting service if you have a low credit score.
- Telecommunications companies. When you sign up for new phone, cable or internet service, the service provider might check your credit. While the company is interested in your bill-paying history, they are also checking to see if you owe money to them for prior service or another telecom provider.
- Health/Life insurance providers. Health insurance companies can look at your report if you apply for a policy with them. Usually, they’re not interested in your credit history but instead may ask about your medical history or about any insurance claims you have filed.
The FCRA allows credit reporting companies to release your credit report in association with “offering insurance coverage or setting insurance premium charges,” according to the Consumer Financial Protection Bureau.
However, the credit reporting agency cannot provide an insurance company a credit report that contains medical information unless you consent.
If you’re seeking life insurance for $150,000 or more, the life insurance company is entitled to see older information that wouldn’t otherwise be included in your credit report.
- Car insurance companies. Auto insurance companies often will check your credit when you apply for coverage for your vehicle, to help determine how much to charge when offering a new policy.
- Employers. Many employers review credit reports as part of evaluating potential new hires. They may use this information to judge financial honesty and integrity, as well as the risk of bribery if you have a lot of debt.
As part of a background check, employers can request a copy of your credit report. The FCRA allows credit reporting companies to release your report for employment purposes.
However, the employer must get your written permission to pull your credit report. You have the right to refuse, but that could be grounds for the employer to reject your application, according to the Federal Trade Commission.
Once you’re hired, your employer can use the report for just about anything related to the job, including promotion and reassignment decisions.
- Government agencies and courts. The FCRA permits government agencies to request your credit report for a variety of reasons:
- To determine whether you are eligible for public assistance (to look for hidden income or assets)
- In response to court orders or subpoenas
- To help determine whether, and how much, you can pay in child support
- To consider your financial status in determining eligibility for a government-issued license
- To investigate international terrorism
Government agencies can also get identifying information about you (such as name, address, former addresses, places of employment, or former places of employment) from credit reporting agencies, even if they don’t have a purpose related to credit, eligibility for services or child support.
- Collection agencies. If you have unpaid bills or debts, collectors can view your credit report to locate you, learn more about your assets and help to decide whether they should begin collection efforts against you.
- Entities with a court order. Even if a person, agency or business does not have another permissible reason to get your report, they may be able to obtain a court order. For example, the IRS might get a summons that allows access to your credit report.
Generally, you would receive notice and a chance to oppose the request for a court order.
- Assisted living facilities and nursing homes. If you or a loved one is applying to an assisted-living facility or nursing home, you can expect a credit check. These facilities basically treat applications like applying for an apartment, especially given the often high costs involved.
Having good credit shows the facility that you’re responsible with your payments and that you’ll use whatever funds you have to pay for your living expenses.
Who cannot look at your credit report
Apart from those listed above, most other people and businesses cannot legally request a copy of your credit report. For example, your credit report may not be used in divorce, child custody, immigration and other legal proceedings. Nor can district attorneys look at your report to investigate civil or criminal cases.
Detecting unauthorized users
It’s not always easy to find out if someone who should not have access to your credit report has requested and received one anyway. One way to detect unauthorized users is to order your credit reports from AnnualCreditReport.com and look for unfamiliar names or businesses in the list of inquiries.
Resources: Fair Credit Reporting Act, Consumer Financial Protection Bureau, Federal Trade Commission, Nolo.com, Money Talks News, One Minute Economics