PULLING YOUR CREDIT

How would you feel if someone snuck into your house, opened your file cabinet containing all of your financial documents and looked over your personal information? To make matters worse, what if that person made a copy of all the documents before sneaking back out. The same type of scenario - except done electronically - happens more than you think.

Credit Reporting Agencies (such as Equifax, Experian, and Trans Union) gather staggering amounts of information about you from a variety of sources. Your birth date. Social security number. Your current and past addresses. AKA (also know as) names. Your job history, including where you applied for a job. Loan amounts. Credit card history. Payment history. Court judgments. Tax liens. Bankruptcies. Collection information. When and where you shopped for cars, cell phones, or insurance. In sum, credit reports shows a very clear picture of your spending and shopping habits. This information, often filling up 10 - 20 pages, is available to anyone willing to pay for it.

Because of the potential for great harm that can result from misuse of such information, the federal FCRA prohibits access and use of such information without a "permissible purpose." In fact, obtaining credit reports under false pretenses is a criminal act under both federal and Arizona law. Despite such prohibition, there are widespread illegal access to credit reports. Enforcement of the prohibition by the government is very lax. Fortunately, you can enforce the prohibition through the civil justice system because the FCRA allows you to sue and recover your actual damages, punitive damages if appropriate, and attorneys fees and costs.

How are you damaged when someone impermissibly looks at your credit history? First and foremost, it is an unwarranted invasion of privacy. You don't know who looked at your private information. You don't know what will happen to your private information. With the identity theft at an epidemic rate, you should be concerned about who is looking at your private information. Moreover, frequent inquiries will lower your credit score leading to higher cost of credit - in higher interest rate - or even a denial.

A key issue is exactly what is "permissible purpose"? Listed below are more common "permissible purpose" under the FCRA:

• Court order
• written permission
• credit transaction (loans)
• collection
• employment
• insurance

Listed below are examples of proper and improper access of credit history.

1. You visit a car dealer just to look around. As you are ready to test drive a car, the salesman asks you to leave your driver's license with his manager for "insurance purposes." You like the car and start negotiating the price. The salesman then tells you that your monthly payment will be low because your credit report shows it is good enough to qualify for low interest loan. Here, the dealer did not have a permissible purpose. You did not apply for a car loan. In fact, the dealer had no idea whether you were going to pay for the car with cash or a loan.
   
   
2. You visit a car dealer to look around. The salesman asks you to fill-out a "guest sheet." Unbeknownst to you, the guest sheet has a small print sentence allowing the dealer to pull your credit history. This is a more difficult issue. Unless you can prove that the dealer deceptively obtained your signature on the guest sheet, the dealer probably had a legal basis for accessing your credit history. The fact you did not carefully read all of the guest sheet before you signed it does not negate the presumption that you agreed to the terms of the guest sheet.
   
   
3. You pay for a law mower at local hardware store with a personal check. Accepting payment in forms of a personal check is considered extension of credit for purposes of FCRA. A check is nothing more than a promise to pay certain amount when presented at the proper bank. Therefore, it is considered a credit transaction and the merchant accepting the check has a right to check your credit.
   
   
4. You want to buy a car. However, you are embarrassed by the fact that you filed for bankruptcy last year. You tell the salesman that you will buy a car from his dealer with a personal check as long as it agrees not to pull your credit report. Salesman agrees. However, you learn that the dealer pulled your credit. Here, even though the dealer had a permissible purpose in the first place, it agreed to not pull your credit. Therefore, it should not have pulled your credit history.
   
   
5. Your car is stolen. A few days later, it is found in the woods, burned and damaged beyond repair. Your insurance company suspects that you staged the incident to collect the insurance money. Your insurance company asked the police to investigate. The police pulls your credit to see if you experienced financial problems requiring money. This is a fact pattern from a recent case I handled. The police do not have a right to access your credit history without a court order. However, this is a routine practice among many police agencies.

How can you tell if someone has looked at your credit history? Your credit report will tell you who accessed your credit and for what purpose within last 2 years under the "inquiries" section. You should regularly obtain your credit report and examine it carefully. You are entitled to get a free credit report once a year from the Big 3. You can go to www.annualcreditreport.com and obtain a free credit report. Although it is a somewhat cumbersome process, you can instantly access your credit report. Be sure to purchase a "tri-merge" report which costs $32.00. A "tri-merge" report combines all three credit bureaus' reports. Carefully review your credit reports to see if anything is incorrect, inaccurate, or suspicious.