Not just anyone can access your credit report – your consent or a permissible purpose is required. It’s important to understand the distinction between a “soft inquiry,” which does not adversely affect your credit score, and a “hard inquiry” which can lower your score, and remain on your credit report for up to two years.
Soft inquiries occur when a person or company checks your credit report as a background check, such as when you are “pre-approved” for credit card offers, and when you check your own credit score.
Hard inquiries most commonly occur when a financial institution, such as a lender or credit card issuer, checks your credit report when making a lending decision. In order for a person or company to perform a hard inquiry, they must have a legitimate business need. Some other examples of which financial actions result in a hard inquiry are:
- Applying for an auto loan, student loan, business loan, or personal loan
- Applying for a credit card
- Applying for a mortgage
- Landlords seeking a credit check for renters (depending on the status of your application)
- Companies where you are seeking employment (only with your written consent)
- Organizations considering your application for a government license or benefit (if the agency is required to consider your financial status)
- Government agencies (usually can only look at your name, address, former addresses, and current and former employers)
If someone has performed a hard inquiry of your credit report without one of the above purposes, you may be able to sue them for up to $5,000.00 under the Fair Credit Reporting Act. If the prohibited access has caused you financial harm, you may be entitled to more. An action under the Far Credit Reporting Act may be brought no later than the earlier of (1) two years after you discover the violation; or (2) five years after violation occurred.
What can you do?
Get alerts whenever someone accesses your credit report, and call us if you think a person or company has accessed your credit report without your consent or a permissible purpose.