Your credit report contains some of your personal information and payment habits that some businesses will use to determine whether they should offer you their services and how much they should charge you. However, not just any business can check your credit report, not without your permission.
According to The Fair Credit Reporting Act, only businesses with a “permissible purpose” are allowed to access and check your credit report. It includes organizations verifying whether you qualify for a loan or credit card, companies checking whether they should hire you, and utility companies checking your credit to see if you can afford their services. Here is a list of businesses that can access your credit report for various reasons:
Current lenders & creditors
If you apply for a credit card or loan, your lenders and creditors might want to check your credit report. If they notice multiple missed or delayed payments, they might offer you a high-interest rate loan or not qualify you. Similarly, they might even give you a lower interest rate on rare occasions if you have a good credit report. Creditors can also increase or decrease your credit limit based on the payment history reflected on your credit report.
So overall, creditors and lenders who you already have accounts with don't require your explicit permission to check your credit. The terms and conditions of your agreement already allow them to do credit checks periodically.
Loan and credit card offers
Some organizations occasionally do credit checks to see if you would qualify for a pre-approved credit card. These are soft credit checks that don't appear in your credit report. They might offer you a pre-approved credit card with low-interest rates if you meet their criteria. They will move on to someone else's record if you don't qualify.
Current or prospective employers
Potential and current employers can't pull out your credit report independently, but depending on where you live, it may be possible for them to pull out at least a modified version of it. Potential employers sometimes check your credit report to determine whether to hire you. Your current employer can also access it before offering a raise or promotion. Negative information such as late repayments, unpaid bills, and defaults could cost you your job or next promotion.
Be aware that prospective employers need your written permission to check the report. Also, they won't see your credit score, just your history.
Only in extreme cases are court orders granted to verify someone's credit history. These aren't easy to obtain. However, suppose an entity appeals in court to ascertain your credit history and has substantial evidence and reasons to back it up. In that case, they may be granted permission to access your credit report without your explicit consent.
Potential landlords may also check your credit report. They tend to assume you will pay on time if you have a good credit history. Bad credit history might mean you won't be able to rent the house.
So what can we conclude?
These are the instances when companies can access your credit report for different reasons. You should also check your credit history periodically to ensure it's all correct and nothing seems out of place. If you see any errors, get in touch with your lenders ASAP. The misinformation could reflect badly on you when companies perform checks randomly since they won't know there's an error. We hope this helps you understand who can access your credit report and how you want to manage it.