The Fair Credit Reporting Act is the federal law that regulates how consumer credit reporting agencies can use your credit information. The section of the law that explains who is allowed to access your credit reports and why falls under section § 604. Permissible purposes of consumer reports.
In layman's terms, there are technically only eight permissible purposes for your credit reports to be pulled:
At your request. We all have the right to access and view our own individual credit reports.
In response to a court order or subpoena. This typically happens in credit-related lawsuits involving lenders, consumers, and/or credit reporting agencies.
In relation to a credit application. When you
apply for a loan, the lender is granted permission to pull your credit
report to determine whether or not to grant you the loan.
For an account review. Your existing lenders are legally allowed to periodically pull your credit reports for account review purposes.
For pre-employment screening. Your potential employer has the right to pull your credit reports when determining your employment eligibility.
For purposes of insurance underwriting. Even though most people disagree with this one, insurance companies are legally allowed to use your credit reports and insurance scores to determine your insurance premiums and whether or not they want to issue a policy for you at all.
In an attempt to collect a debt. If you default on a loan or owe an unpaid debt, lenders and/or debt collection companies have the right to pull your credit reports for the purpose of collecting a debt.
In relation to child support. Credit reports can be accessed to determine an individual’s capacity or ability to pay child support.
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