Is it legal to have a credit check run if it is not authorized?

Written by russell huebsch
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Is it legal to have a credit check run if it is not authorized?
You must give consent to run a hard pull on your credit report. (photo checkbox credit image by Aleksandar Radovanovic from Fotolia.com)

Anyone who checks your credit without prior consent has violated the law and it could result in hundreds of dollars in restitution or more for you. Credit profiles are considered a private matter and the act of pulling a report can hurt a person's score. Consumers will probably have to become proactive to stop unauthorised used of credit checks.

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Identification

When a creditor runs a credit check on an applicant without receiving authorisation, he has violated the Fair Credit Reporting Act. Congress enacted the FCRA in the 1970s to protect consumers from discrimination based on information in their credit profile. Each violation of the FCRA carries a penalty of £65 up to £650 for each violation.

Preapproved Offers

The lone caveat to the FCRA requirement for authorisation to run a credit check is for

"preapproved offers." This type of offer comes through the mail without the consumer applying for it. Credit checks for this kind of loan do not affect a credit score and are not seen by lenders, because such offers are considered to be a "soft" pull. As of 2011, preapproved offers are legal.

Action to Take In Case of Unauthorized Check

You can sue someone in civil court if they run a credit check without your consent, but you may need a lawyer and will have to prove the act was intentional. In addition to legal action, you should write the lender and ask him to remove this inquiry with the credit bureaus. If the lender ignores your complaint, write to the credit bureaus themselves -- you only need one bureau to uphold your claim for the others to also remove the inquiry.

Tip

Consumers can opt out of preapproved credit offers by filling out a form at OptOutPrescreen.com. The opt out lasts for five years, but you can also opt out of offers forever. Be careful when giving your driver's license to anyone, because it contains enough information to run a credit check. Car dealers sometimes run a credit check without consent, even for people who do not express an interest in financing a car. It is good practice to ask anyone with your private information if they will run a credit check.

Considerations

Some people only need implicit authorisation to run a credit check. An employer, for example, can run a credit check as part of background research on a candidate. Utilities, phone companies and landlords usually require authorisation to run a credit check as part of their applications.

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