- This writer recently received an inquiry from an employee who was disturbed that her employer had obtained a copy of her credit report. Is this legal? Under certain circumstances it is.
- Obviously credit reports contain information regarding an individual's credit history and creditworthiness. However, they can also contain information indicative of character and reputation (including records of arrests and convictions) as well as lifestyle. Sometimes they even contain medical information. These reports are maintained by businesses known as "consumer reporting agencies" which are regulated by the federal Fair Credit Reporting Act.
- Credit reports can be accessed by anyone who intends to use the information in connection with a credit oriented transaction such as securing a bank loan, home mortgage or new credit card. When an individual applies for any of these items they are granting the creditor access to the report. However these reports can also be accessed by any entity with "legitimate business needs" that may have nothing to do with obtaining credit. Potential employers, insurers, government agencies overseeing the payment of child support or issuance of licenses can fall into this category. It is important to note that individuals seeking credit will normally be asked to sign documents consenting to access to the credit report. However, entities with a "legitimate business purpose" do not necessarily need your consent.
Generally, employers are not required to obtain consent before obtaining a standard credit history. However, the FCRA requires employers or potential employers to notify an individual in advance if they wish to obtain an "investigative consumer report" generated by a private investigator who might interview relatives, neighbors, and former employers. Such notice must be given three days from the date the report is requested. The employer must also inform the employee or applicant of his or her right to request more information about the nature and scope of the investigation in writing.
The employee must respond to this request within five days. The employee does not have the right to obtain a copy of such a report from the employer, but may request from a consumer reporting agency copies of any reports supplied to employers over the previous two years.
- Consumers filing credit applications also have the right to request copies of credit reports and lists of the entities who have requested them for the previous six months. This is an important right which individuals should exercise to check the accuracy of the information in their credit reports. There are certain items which should not appear on a credit report after a prescribed period of time. For example, Chapter 11 bankruptcies should not remain on the report for more than 10 years. Other adverse items including judgments in lawsuits, paid tax liens, accounts in collection or charged off, and records of arrest indictment or conviction should be removed after seven years. It should be noted, however, that if the credit information is being sought in connection with a credit transaction or insurance policy worth more than $50,000 or employment with an annual salary of more than $20,000, the otherwise omitted information listed above can be disclosed.
- Credit reporting agencies are required to verify the accuracy of the information on the reports they issue. If these agencies willfully fail to comply with the FCRA they can be liable in court for the actual damages they have caused by supplying incorrect information as well as punitive damages, litigation costs and attorney fees. The pursuit of such lawsuits can be very difficult, however, so the following tips are offered to aid the reader in maintaining the accuracy of his or her credit record.
1. Order a copy of your credit report after you have applied for credit and received an adverse decision that is claimed to be based on information contained in your credit report. You can obtain a free copy of the report if you request it from the reporting agency identified in the rejection letter within 30 days of the date of the rejection.
2. Periodically check your credit report, especially if you intend to apply for a significant amount of credit for which you cannot afford to be rejected. The major credit reporting agencies maintain reports on most American adults and these reports can usually be purchased for $25.00. Note that different agencies could have very different information, so checking several of them at once can be a good idea.
3. You have the right to dispute the accuracy of any item on the report. When you request a credit report, the agency will supply you with the dispute procedures. The agency must investigate your complaint. If the dispute cannot be resolved with a complete removal of the offending information, the consumer has the right to file a brief statement of explanation that will be attached to every copy of the credit report that is disseminated.
4. Report any problem to the consumer reporting agency immediately after discovering it. Keep records of all your contact with the agency in the event that they do not adequately respond.
Note that under the current federal administration, it is very likely that the FCRA and other laws could be amended in ways that limit the rights of consumers to both access and correct their credit reports. For that reason, any concerned consumer should be prepared to seek legal advice on the issues and to research protection under Oregon or Washington state law which could be more favorable.