7 times when it's OK to check someone's credit report
Can you pull someone
else's credit report?
Absolutely, and there
are a number of circumstances when you ought to. Consumer credit reports and
credit scores can provide valuable insight into an individual's finances. With
them, you can reduce risk, save money and even help someone offset trouble.
Permission and purpose to pull
Before you even
attempt to review another's credit file, however, you should know the rules. In
most cases, you'll need permission from the other person before pulling
personal data. "The Fair Credit Reporting Act (FCRA) allows an individual to
access another's credit report if they have a credit authorization," says
Jeremy Maher, founder of the credit education program Credit Repair Doctor.
You'll also need a "permissible purpose." In general, this means a legitimate
business reason, such as offering someone a loan, employment or a home. Other
FCRA-approved reasons include helping someone guard against fraud or validating
the financial circumstances of a person in a child support case.
In a few circumstances,
you can check without authorization, such as when you're granted that action by
a government agency or court of law or to access a minor child's file. The same is true if
you have power of attorney, which allows you to make financial decisions for
someone when they're physically or mentally unable to do so.
Ultimately, there is a
major difference between asking a person to share a credit report with you and
actually pulling it on their behalf. You don't need to follow the FCRA in the
former situation, but you do in the latter. Ignore these rules at your peril.
If you acquire someone's credit report illegally, that person can sue for
damages with fines up to $1,000 and tack on attorney's fees, too.
Assuming you have the formal go-ahead, you can get the reports directly from either the credit
bureaus (TransUnion, Experian and Equifax) or via AnnualCreditReport.com.
Unlike a bank or other business that has direct access, you'll need to provide
a considerable amount of the other person's identification details. This
includes legal name, home address, Social Security number and date of birth.
Additionally, says Maher, you'll also be instructed to answer such questions
as: "What was the name of the bank you had your car loan through in 1998?" and
"What is your current payment on your home mortgage through X bank?" So, unless
you're privy to that type of information, you'll probably need the person
accessible during the process.
Depending on the
circumstances, you may also want to take a look at credit scores, too. These numbers
offer an immediate indication of a person's risk level at that moment. Most
lenders use FICO scores, which range from 300 to 850. As with reports, you'll
have to get the person's involvement and approval before access. And the scores
aren't free -- you or the individual will have to pay about $20 at MyFICO.com.
When to check and what to look for
There are seven times
when pulling the credit curtains wide open makes sense. But to make an accurate
assessment, you should also know what to focus on for each situation.
guard against identity theft after your spouse has died. Sadly, fraudsters (and even some family
members) have been known to target the identity and credit of those who have died. You can prevent this from happening by alerting the three major
credit reporting bureaus and requesting the credit files as soon as possible. These
thieves tend to strike in the immediate days and weeks following a death. To
gain access to the deceased's credit files, you'll need to submit an original of the person's death certificate and detailed personal identification
information (which may vary by credit bureau). Also, request that a "do not
issue credit" notation or credit freeze be added to the report, and that you
want to be notified if someone attempts to open an account in his or her name.
see if your child's credit has been compromised. Is your child getting
credit card solicitations in the mail? If so, you may want to contact the
credit bureaus to check for fraud. Identity thieves sometimes target minors,
and you'll want to discover problems before your child turns 18 and begins applying
for student loans or if you want to add him to your credit card account.
Mistakes can also happen, warns Maher, such as your credit history appearing on
your child's report because you share the same name (especially if your son is
a "junior"). Identify any account that shouldn't be there and dispute them with
the credit bureau. You typically cannot pull a credit report online for a
minor, but will have to call the credit bureaus directly. If you suspect fraud,
you'll have an easier time accessing your child's credit reports (if they
exist) by contacting the ID Theft Resource Center.
about an aging parent's finances. Children aren't the only loved ones who can warrant a credit
report check. Senior citizens are also typical targets of fraud. Zero in on
loans and lines of credit that your mom or dad never signed for or on unusually
high balances on legitimate accounts. Thieves or other unsavory souls sometimes
convince the elderly to open new accounts or to add them as co-signers or
users. "While you can't control [your parents] or their actions, finding this
out early and pointing out what has happened may convince them they have been
duped and prevent them from doing something like that again," says Wayne Sanford, president of the credit consulting
company New Start Financial. If
you worry that your parents are applying for random cards or making irrational
charges because they are suffering from dementia, check the reports for
evidence of that as well. To see the report, you will need to obtain power of attorney or court-ordered guardianship, and provide that documentation in writing to the credit reporting agencies.
hiring someone. As a sole proprietor,
you may be in the market for a little help. Before hiring an employee, you can request
to see a recent copy of her credit report, especially if she'll have access to
your funds or private information. In most cases you'll want to see a track
record of well-managed accounts. However, says Hankins, "If you're looking for
a motivated salesman, high debt may actually be advantageous. He may be
motivated to sell for you just to pay it off." In addition to a credit report,
you may also want to run a background check, says Tracy Becker, president of
Northshore Advisory, a credit education and restoration company. "You can pull
limited information. such as criminal records, public records and even find
date of birth, addresses and any aliases that individual might have used."
Background checking companies like Snoop Station and US Search provide limited information for free and
more extensive data for a fee.
see if your sweetie's a keeper.
Relationship getting serious? Take a peek at your potential life partner's
credit report. Since you'll be merging finances, learning how he or she's been
managing money is essential. You may be able to excuse a bit of debt or a
missed payment, but, warns Sanford, "if you see a consistent pattern of horrible
payments, then that should be a huge issue for you." Besides big credit card
balances, Sanford says to look for cellphone and utility bill collections and
car repossessions. Oh, and want to live or buy a home together? "If you see an
apartment collection, understand that a mortgage lender will probably not give
you a loan." The best approach to doing this is to either have your intended
present you with a current copy of his or her credit report or you can both set
aside time to pull and review your credit reports together.
think your spouse is cheating.
No need to hire a private eye; evidence of a lover may be revealed on a credit
report. Scan it for new accounts at specialty stores like those that carry
mainly lingerie or luxury items for which you've never been the beneficiary. It
may be as simple as a new credit card, says Sanford. "Why did he get it? Why is
the bill going to his work address and not home?" Legally, you can't access a
spouse's reports in secret (though many a suspicious mate has done so), but you
certainly have the right to demand it be turned over for inspection.
a potential roommate. Landlords and
building managers often request credit reports before approving a tenant. Prior
to bringing a stranger into your home as a roommate, you may want to do the
same. Focus on current, not older issues. "Concentrate on missed payments and
negative items over the past one to two years," says Maher. "If they had a
financial issue three-plus years ago and their credit has been clean since
then, those financial problems are probably in the past." Again, the preferable
approach would be to ask to see a recent copy of the credit report rather than
pulling the report yourself, even if you have permission.
Verify before jumping to conclusions
One final thought: Don't be too hasty in drawing conclusions from a credit report. Credit reports and scores aren't
updated overnight, and many contain errors. According to Maher,
it's common for people reading other people's reports to freak out
unnecessarily. "Your emotions can flood your judgment. If an account is closed,
sometimes the bureaus may still show it as open," says Maher. "Then you say, 'You told me you closed the accounts, you lied to me!'"
using consumer credit reports to formulate conclusions about someone's
borrowing and repaying habits, ask the person about what you see that's
alarming. Let the report open the conversation, not shut it down.
See related: Why your credit report matters more than your credit score
, Unfamiliar names on credit report could single ID theft
Published: March 21, 2012