If you want to buy a car, apply for a mortgage, or get a credit card, you probably know that the lender will be pulling your credit score. Credit scores, or FICO scores, are one of the primary tools used by lenders to try to assess the likelihood of your default on a loan, and whether you will make timely payments if they extend credit to you.
What you might not realize is that plenty of other people are looking at your credit score besides creditors. There are plenty of other situations in which your credit score can play an important part in decisions that affect your life. Insurance companies, landlords, utility companies, and even employers are checking credit scores these days. A credit check has become a routine part of a renter’s background check in many places. There are also creditors and companies who pull your credit scores for “promotional purposes” – that is, they want to see if they should market their services to you.
In fact, anyone with a “legitimate business need” can gain access to your credit report, including government agencies, child support enforcement agencies, and anyone who wants to be in business with you. With the exception of employers, who require your written consent to obtain a copy of your credit report, these people can pull a copy of your credit report without your permission – or even without your knowledge. These inquiries then become part of your credit report – but they are called “soft inquiries.” “Hard inquiries” are inquiries that come from a lender who is inquiring for the specific purpose of extending you credit. Numerous hard inquiries can have a negative impact on your score, but soft inquiries have no impact whatsoever.
Even if you are not in the market for a car or a home loan, it’s important to know your credit reporting rights, as well as what is on your report, and who is looking at it. You can also consult the federal Fair Credit Reporting Act (FCRA), which safeguards your privacy by restricting who has access to the sensitive information in your credit report.