Can You Check Someone Else’s Credit Score?
It is impossible to take a sneak peek at another person’s score if you are a regular consumer. Only several companies can do that with or without your permission. Your spouse or a government company could do it, too. Therefore, before you ask yourself, “Can I run a credit check on someone?” learning the game’s rules is wise.
Due to the FCRA (Fair Credit Reporting Act), many legal formalities exist in extending a consumer’s credit information. The term “Permissible Purpose” here is the major one. It is unlawful to offset somebody’s credit rating without good reason. Let’s present details about who can do this activity and when possible.
Understanding who can legally access your credit report is crucial for protecting your financial privacy and assessing your creditworthiness fairly. We will investigate who can check your credit score, and under what circumstances. Discover tips and tricks on how you can monitor and protect your credit information from different frauds.
Table of Contents
- Who Are Some People Who Might Need to Look at Your Credit Report with Your Permission?
- Can Someone Run Your Credit Report Without You Knowing About It?
- Impact of Credit Checks on Credit Rating
- Can You Stop Someone From Checking Your Credit?
- Bottom Line
Who Are Some People Who Might Need to Look at Your Credit Report with Your Permission?
A few select people can look at your credit report, but do not fret; they will only be allowed access if you consent. Check the following list of who can verify your credit with your permission.
Lenders
Most of the time, banks, credit unions, or any institution providing loans like mortgages or credit cards would like to pull your credit report with your consent. They recheck your credit records to determine your credit standing, the probability of extending a loan to you, and the terms and interest rates you may be offered.
Landlords (Screening Tenants)
Landlords get credit reports to better understand the person’s abilities in paying for the rent and overall financial responsibility. A low credit score may result in a higher deposit amount, overall rent cost increase, or even denial. That’s why it is suggested that you improve your rating before applying for a new rent.
Employers (Screening Job Applicants)
Employers can use applicants’ credit scores to select employees during recruitment. They wish to ensure that their workers are sound financially, particularly when the occupation entails managing fiscal matters or confidential documents.
Insurance Companies (During Underwriting)
This practice applies to different insurance policies, from auto to homeowners insurance. When analyzing your credit history report, the insurers see your habits, including your mode of payment, balances due, credit utilization, and a DTI ratio.
The data help them assess your risk factors and estimate your probability of filing a claim. Credit ratings can be seen as good or bad, and therefore, people with high scores can be considered as posing less risk to the insurance company. Thus, they may be given lower rates.
Utility Companies (Applying for Service)
One major category of people who would likely wish to verify your credit report with your consent is utility firms. When you establish new services, such as electricity, gas, or water, they will conduct a credit check to determine whether you will pay your bills on time. If you need to connect certain utilities when relocating to another new place, do not be surprised if the providers check out your credit report.
Potential Spouse (For Legal Reasons)
A future spouse might need to access your credit report with your consent. This is especially true if both parties are going to combine assets and liabilities, purchase property, or for any other reason as part of essential disclosures on the financial state. It helps minimize surprises at a later date.
Government Agencies (For Specific Reasons)
Both you and a credit reporting agency can permit the government agency to access your credit report, but there are some reasons why a government agency might need to look at it. For example, if you are applying for a government job that requires passing security clearance, they will most likely want to see your credit profile. Also, if you are going for government-sponsored financial assistance or loans, they may do a credit check. They will also like to know more about your financial situation if you have some problem with the IRS regarding taxes.
Court-Appointed Guardians
Court-appointed guardians are some players who may be allowed to check a person’s credit report. These are legal persons appointed by the court to oversee some of the facets of your life, particularly if you cannot attend to them on your own. It usually comprises your finances, meaning they oversee your monetary matters appropriately.
By providing an opportunity to review credit reports, they can monitor the financial status, detect any unusual activity, and proceed with further actions to benefit their customers. Whether passing payments, fraud detection, or handling debts, court-appointed guardians can help you protect yourself financially. That is why, although such a thing will not happen daily, allowing them to get permission for the view on your credit report can be necessary for living a stable and secure life under their care.
Can Someone Run Your Credit Report Without You Knowing About It?
Your credit score may also be accessed without your permission. This action is allowed only for two entities. Check the details below:
Debt Collectors (Verifying Debt)
Debt collectors do it to verify the consumer’s ability to pay a particular debt. They are financial detectives who investigate your financial past to understand or at least try to find out who you owe money to. Usually, there are some restrictions in sharing your credit report, and the user must authorize it.
However, collectors are more liberated in this sphere as they professionally collect debts. They are allowed to get to some details when it comes to assisting in recovering debts. Consequently, if you discover a third party has accessed your credit reputation without obtaining your consent, they are likely to represent a collection agency.
Government Agencies (Court Orders/Child Support)
A few government actors are allowed to spy on your credit report without telling you, but there are some procedures they must go through. There is a single tremendous factor that affects decisions ― court orders. If an agency has such an order, it can check someone’s credit and see their credit report entries. On the other hand, it is something a court can access whenever needed. Child support collectors can also initiate credit report inquiries to examine your financial position.
How to Know if Someone Checked Your Credit?
If you feel like your credit score suffered a decrease because of different reasons, you can check it through these two options:
AnnualCreditReport.com (Free Credit Reports)
Inquiries made to your credit report can be tracked through www.annualcreditreport.com. This website offers free credit reports once a year from all three major credit bureaus: Equifax, Experian, and TransUnion. Review them through this service to see if somebody recently obtained your credit details. For your information, when you request your credit history, it does not impact your score.
Credit Monitoring Services
Another option is to use credit monitoring services. Most of them alert you when you inquire about your latest report. Subscribing to such a service enables one to receive updates on any transactions in their credit sector, giving them a free mind and a chance to act appropriately in case something goes wrong.
Impact of Credit Checks on Credit Rating
There are two types of credit checks, and each has particularities to consider. Let’s take a closer look at them.
Soft Inquiries (No Impact)
Soft credit checks do not affect the credit score rating in any way. They are typically made for informational purposes. These checks normally happen when:
you review your credit report; organizations pre-screen you for a loan or credit card; renters review your solvency; -employers check your background.
The advantage of soft inquiries is that they enable creditors to assess your creditworthiness without denting your score. They also allow affiliated third parties to check credit reports frequently, often without your permission. This approach helps individuals and companies get adequate information on a consumer’s credit status.
Soft inquiries allow for steady financial performance without hitches. When you are looking for a loan or credit card offer, soft checks will help you evaluate alternatives without serious consequences.
In addition, soft inquiries can be used to protect against identity theft. They are used to perform regular credit report checks, which enables you to identify the signs of fraud like unknown accounts or credit checks carried out while you haven’t applied for new loans.
Hard Inquiries (Temporary Score Decrease)
Whenever you seek a mortgage, an auto loan, a personal loan, or a credit card, traditional lenders pull a copy of your credit report from one or all three credit bureaus. This is referred to as a hard inquiry or a hard pull. Such a check can greatly affect your credit rating. Although it’s a temporary impact, a borrower needs to know it before applying for a loan.
Every hard inquiry indirectly affects the credit score by approximately five points. The precise influence of this is determined by several factors, such as your current credit score and how many credit check requests have been made recently. When there are many within a short timeframe, they can be an issue for lenders.
If your credit report contains multiple recent credit inquiries, this shows that your financial status is not good. Nevertheless, credit scoring models often consider that consumers may seek the best deals on products like mortgage and auto loans by converting multiple inquiries into one inquiry within a certain timeframe.
Can You Stop Someone From Checking Your Credit?
Yes, you can freeze your credit. It prevents sharing information about your credit history. In other words, it helps to stop reporting information on your credit record to other lenders or entities that may request the particulars. Through the freezing, clients limit access to their credit information, detaining consumers or companies from initiating credit accounts or acquiring loans in their name.
It can be a preventive measure to shield yourself from identity theft or fraud episodes. Remember that while you essentially include an extra layer of protection with a credit freeze, there will be moments in which you will have to apply for credit yourself, and then the freeze will be in the way.
Bottom Line
FCRA (Fair Credit Reporting Act) is an umbrella that protects credit information and ensures that information-providing entities are correct. It says that an individual or a company should have permissible purposes before getting involved with someone’s credit profile. Although most credit history checks require permission, there are types of checks that certain companies can perform without it. Reviewing your reports regularly is crucial to identify your financial status and activities performed.
See also:
- Everything You Need to Know About Your Loan Balance – https://15mfinance.com/blog/what-increases-your-total-loan-balance/
- How Long Do Derogatory Marks Stay on Credit? – https://15mfinance.com/blog/how-long-do-derogatory-marks-stay-on-credit/
- How to Get Out of a Payday Loan Legally – https://15mfinance.com/blog/how-to-get-out-of-a-payday-loan/
References:
- FCRA (Fair Credit Reporting Act) – https://www.ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act
- Annual Credit Report Check – https://www.annualcreditreport.com/index.action
