Who can access your credit report?
Can anyone access your credit report? That is, is your credit report accessible to the general public? Or is it just accessible to you alone? In this article, those are the questions that we will try to trash out.
You will agree with me that your credit report is very vital and sensitive as it contains essential private information about you. Therefore, the law under the Fair Credit Reporting Act protects your privacy to some extent by ensuring that your credit report is not accessible to the general public. Nevertheless, apart from you, there are some people or entities that the law allows to have access to your credit report. These are enumerated below:
Read Also: How Long Do Hard Inquiries Stay On Your Credit Report
Lenders or Creditors: Lenders or creditors include organizations that lend loans to customers. Such organizations include credit unions, banks, credit card companies, leasing companies and other financial institutions. When you apply for credit or loan, these organizations will like to pull your credit report to learn about your credit history. Your credit history is very important to them so as to determine your creditworthiness. It will help them to decide whether they should grant you the loan, the amount of loan to be granted and the terms of such loan. If you have history of late payments, they may conclude that you will likely miss payments in the future. Also, they want to know about your current credit or loan. They are interested in the amount of loans you owe. If the loan is too high in relation to your income or you have already maxed out your credit limit, it may be difficult for you to get a new loan or credit. Lenders and creditors can also access your credit report after the account has been opened.
Insurance Companies: Insurance companies can also access your credit report. They need it to determine the insurance premium that you will be asked to pay. While insurance companies may not as too particular about whether you will default in paying your insurance premium, they use your credit information to determine the insurance rate that you will be asked to pay. If you default in paying your insurance premium, your policy may be cancelled. People with bad credit tend to pay high insurance premium while people with good or excellent credit score may be asked to pay cheaper premium or they may be granted discount. It is believed that people with bad credit will likely file a claim. This makes their risks to be higher than people with good credit. Therefore, insurance companies will like to compensate themselves with higher premium for the extra risk.
Landlords: If you want to rent an apartment, your prospective landlord may like to carry out background check on your creditworthiness by accessing your credit report. Since rent forms source of income for many landlords, they will not like to rent out their apartments to somebody who will not be able to pay when the rent is due. Any public record of eviction may be a red flag that you will not be a good tenant.
Employers: Your prospective employers can also access your credit report. However, you must have agreed this with them in writing. No employer has right to pull out your credit report without your permission. So, the fact that I mentioned that employers are allowed to pull your credit information does not mean that they have express and inhibited access to your credit report.
Utility companies: It is assumed that utility companies indirectly extend credit to customers who are on contracts. For example, if you want to apply for phone contract, the phone company will like to know about your payment history. This will help them to decide whether you can be allowed to be on contract. However, in some states, phone companies are not allowed to deny people access to phone on the ground of their credit status, people with bad credit may be required to make some deposit before they can be allowed to use a phone.
Government bureaus: In case you want to apply for any permit or license in which financial responsibility is of utmost important, the government agency involved may like to pull your credit. Also, your credit report is a good source of information to find out your contact information. State or local child support enforcement agencies may also want to pull credit to determine the reasonable amount that you will be able to afford to pay.
Collection agencies: If you are in default of your loan, your lender may send your outstanding balance to collection. The first point of contact for them may be to access your credit file from credit bureaus. With this, they will be able to establish how they can contact you. Also, they can find out information about your other debts. This will help them determine whether you will be able to pay back the outstanding loan in question or not.
You should understand that each inquiry made on you credit has the potential of lowering your credit score. Therefore, it is good if you can limit the number of inquiries that will be made on your credit within a period. But if you are shopping for credit card or mortgage, it is always better to do it within a short space of time. Credit bureaus will understand that you are probably shopping for cheap rates. Therefore, such inquiries will be treated as just one. But if you allow the inquiries to stagger like one or two month interval, such inquiries will no longer be regarded as one. Depending on the number of inquiries placed on your credit, the effect can be more. Just a 20 or 30 points drop in your credit score can deny you of getting a mortgage loan or make you to get your loan at higher interest rate. If you are applying for FHA loan, such drop can even affect the amount you will need to pay as down payment.