Financial records can be very revealing and even embarrassing. Most people prefer to keep the details of their financial circumstances private. They don’t want random people looking at their exact income or credit card balances. Bad actors could obtain information they could potentially abuse from someone’s credit report.
The average individual may also want to avoid having companies check their credit report unnecessarily. After all, formal or hard inquiries show up on someone’s credit report for several months and can reduce their credit score temporarily.
People often wonder about what rights they have regarding their personal privacy and their credit report. Can businesses, employers or landlords perform credit checks without receiving the permission of the individual whose credit report they’re pulling?
Most credit checks require consent
Consumer protection statutes can help limit the spread of personal financial information. Generally speaking, companies intending to perform a credit check need to secure the permission of the individual beforehand. Typically, the party checking someone’s credit needs written permission to do so.
In cases where people apply for lines of credit, the application typically includes a clause warning someone of the hard inquiry required to finalize an offer. In scenarios where workers apply for new jobs or promotions, the paperwork that they fill out may include a form granting consent for a credit check along with a criminal record check.
Without requesting the permission of a consumer, businesses typically cannot perform a hard inquiry on their personal credit history. Soft inquiries for pre-approval in the financial realm are common. Unlike hard inquiries, soft inquiries do not require advance consent and do not impact someone’s credit score.
There are a few other exceptions for when companies or other parties can perform hard inquiries on someone’s credit report without their consent. These include investigations where a subpoena is available. The state can also look at someone’s credit history during a child support case. In scenarios where consumers believe that organizations have violated their rights, they may be able to take legal action.
Learning more about privacy laws and consumer protection laws can be beneficial for those affected by questionable credit reporting or credit review processes. Occasionally, consumers may be able to take legal action in response to inappropriate use of credit report information.
