Businesses can pull your credit report under several circumstances, and they don’t always have to ask your permission. And the mere act of a creditor pulling your report can affect your credit score, depending on how the query is classified.
Your credit report is your lifeline to obtaining loans, insurance or credit cards. Maintaining a “clean” report is vital, so it’s always in your best interest to dispute anything you consider inaccurate.
“My credit file is of utmost importance to me right now, given that I have an aging vehicle and a 25-year-old house and I’m in the process of adopting a 12-year-old orphan boy,” Alderman said. “Major expenditures are in my near future, and I can’t afford to pay more for everything because some … company wrongfully pulls my credit report and drives the score down.”
Alderman, an engineering technician from Carrollton, Texas, said his dispute with Avis Rent A Car System LLC started last November while he was on vacation in Hawaii. He reserved and paid in advance for a rental car from Avis as part of a vacation package.
When he went to pick up the car, he used a debit card instead of a credit card to secure the deposit needed.
Avis declined to talk specifically about Alderman’s case. However, company spokesman John Barrows did say the company pulls a credit report only when a customer uses a debit card to rent a car “as opposed to simply using it to pay for their charges upon return.”
“This is a typical procedure in our industry in order to minimize the potential for loss associated with this form of payment,” Barrows said in an e-mail response.
Alderman’s situation brings up issues consumers need to know about their credit report and who can access it.
“The big problem, and where our consumer protection laws are woefully inadequate, is that they pulled a credit report without my authorization,” Alderman said. “This practice should be illegal.”
It isn’t. The only time you must give written permission is when your employer, or prospective employer, seeks to check your credit report.
“Congress felt that because employment is someone’s livelihood, that there be should some special additional protections for consumers, knowing that this information may play a role in their employment decision,” said Rebecca Kuehn, assistant director of the Federal Trade Commission’s Division of Privacy and Identity Protection.
The law lists other “permissible purposes” for which your credit report may be pulled without your express permission. Those include:
• Credit transactions or collections.
• Underwriting insurance.
• Determining eligibility for a license or other benefit granted by a government that’s required to consider an applicant’s financial responsibility or status.
• A business transaction initiated by a consumer.
• A review of an account to see if a consumer continues to meet the terms of the account. An example is your credit card company checking your credit report regularly to determine whether you’re still creditworthy.
The second issue that Alderman disputes on his credit report is the classification of Avis’ viewing the report as a “hard inquiry,” which he says can hurt his credit score.
He’s right.
There are two types of inquiries. Soft inquiries occur when you check your own credit report or when a credit card issuer prescreens you before sending an unsolicited credit card offer. They don’t hurt your credit score.
But hard inquiries do affect your score. That’s when you apply for a loan and a lender checks your credit.
Lenders typically view multiple hard inquiries over a short period of time unfavorably, interpreting them as an indication that you’re looking to take on new debt.
Equifax ultimately agreed to remove the hard inquiry from Alderman’s credit report.
His experience underscores the importance of asking whether your credit report will be pulled. If you want to dispute an inquiry on your credit report, go through the same process as you would with any item you’re questioning on your report.
Consumers sweat over inquiries more than necessary, said Rod Griffin, manager of consumer education at credit bureau Experian.
“No one is ever declined solely because of an inquiry,” he said. “It’s the late payments (and high balances) and other problems that are really what’s important. Inquiries lose any value in a very short period of time.”news source : http://www.thenewstribune.com/business/story/315513.html
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