Your credit reports are full of information about you, from the types of accounts you have opened to how you’ve managed those accounts, to your current and previous addresses.
What you may not realize, however, is just how valuable the information contained in your credit reports may be to a variety of different companies.
The companies that are responsible for collecting that information, along with the information of some 220 million or so other consumers, are known as the credit reporting agencies (CRAs). The three largest and most well-known CRAs are Equifax, TransUnion, and Experian. The CRAs make money, among other ways, by collecting your information, compiling it into credit reports, and reselling it to a variety of different companies that are allowed to purchase it.
Generally speaking, your overt permission is not required for the CRAs to collect information about you and store it as part of your credit management history. Your permission isn’t even always required when your your personal credit information is provided to a third party.
That being said, the Fair Credit Reporting Act (FCRA) does put some restrictions on who can access your information. In order for a CRA to disclose your credit report to another party, they must have what’s referred to in the FCRA as “permissible purpose.”
Here are a few, though certainly not all, of the most common types of companies with a permissible purpose to purchase your credit reports from Equifax, TransUnion, and Experian.
Are you planning to apply for a new loan or credit card account? If so, you can bet the lender or card issuer will be purchasing a copy of your credit report(s) during their review of your application. Credit reports — and credit scores, which are an add-on product typically purchased alongside credit reports — help lenders predict the risk of doing business with you.
- Related: What’s a Good Credit Score?
Landlords and Property Managers
Lenders aren’t the only ones who use credit reports to help predict the risk of working with new applicants. Landlords and property managers will also commonly purchase credit reports and review your past credit history whenever you fill out an application to lease a home or apartment. If your credit is poor, then you may be denied housing or you may be asked to pay a deposit.
Lenders and credit card issuers with whom you already have a relationship are permitted to check your credit reports as well. Credit card issuers perform routine account maintenance checks in order to make sure that your level of credit risk has not changed and that they’re still comfortable doing business with you. If you suddenly begin to have credit problems elsewhere, then your card issuer can lower your credit limit or even close your account.
Did you know that your credit history could potentially be as influential on your auto insurance premiums as your driving record? Auto and homeowners insurance providers regularly buy credit reports from the CRAs whenever a consumer applies for a new policy. The better the condition of your credit, the lower the insurance premium you’ll likely be offered.
Unlike every other scenario, your overt written permission IS required in order for an employer to purchase your credit report. Still, in most states, employment-related credit checks are quite common whenever you apply for a new job or position.
Collection agencies are allowed to purchase your credit reports, and for that your permission is not required. In fact, even if your credit reports are frozen, debt collectors will still be able to pull them. While you do have rights when it comes to debt collectors, the FCRA clearly allows for the credit bureaus to sell credit reports to collection agencies and to assist in their debt collection efforts.