That last one was a little tongue in cheek because, by law, you aren't allowed to pull someone's credit to see if they'd be a good date. The law that prevents that is the Fair Credit Reporting Act, which specifically states what a credit report can be used for under §604:
• Applications for credit, insurance, and rentals for personal, family or household purposes.
• Employment, which includes hiring, promotion, reassignment or retention. A CRA may not release a credit report for employment decisions without consent.
• Court orders, including grand jury subpoenas.
• "Legitimate" business needs in transactions initiated by the consumer for personal, family, or household purposes. (litigation is not legitimate by 3rd parties)
• Account review. Periodically, banks and other companies review credit files to determine whether they wish to retain the individual as a customer.
• Licensing (professional).
• Child support payment determinations.
• Law enforcement access: Government agencies with authority to investigate terrorism and counterintelligence have secret access to credit reports.
(courtesy of the Electronic Privacy Information Center's page on the FCRA)
You might only agree with the first item on the list, the only one that uses the word "credit," but the FCRA grants pretty wide rules for the use of credit reports (sorry, dates not included). Credit reports and credit scores are becoming far more important than they were ever intended, having a good understanding of what is legal helps curb the more creative uses.
This is especially important for anyone being harassed by debt collectors. Debt collectors, in their zeal, will sometimes violate the FCRA when pulling someone's credit report. If they pull your credit report under false pretenses and use that information against you, you can be awarded damages. A good example is if they threaten to have you evicted because they find out that you own a house (mortgages are listed on report). That's illegal under the FCRA.
Do you think credit reports are becoming too pervasive? Credit scores far too important?
Jim writes about money issues on a daily basis at personal finance blog Bargaineering.com.
(Photo: jadedhalo)
]]>@lmarconi: To actually answer your question, the cheapest way to actually get your real credit scores from all three agencies is to enroll in the credit monitoring service from one of the agencies. Be really careful that you're actually on the webpage of either TransUnion, Equifax, or Experian. I know everyone around here blasts freecreditreport.com, but it's actually from TransUnion and will show you all three scores.
If you sign up for the trial month, you can see all three scores. You just have to cancel the subscription before the month is up or it will start charging you. You have to actually call in to cancel which is by far the most annoying part of the process. Once you've used the free trial, you can enroll for one month at a later date and pay somewhere around $15 to check scores again.
Some people hate the credit monitoring services. I didn't mind paying $15 to know for certain that I was walking into my bank to negotiate a loan from a strong position. Sure, I did my research and found a trustworthy banker that I know she would've told me the score she was looking at, but I wanted to be certain of the report she was about to get when I was making the biggest purchase I've made in my life so far...
]]>First, I don't remember where I heard this so I have no idea how true it might be. However...
I've heard that insurance companies evaluate people with high credit scores as being more financially responsible, and therefore not only being more responsible on the road but also MORE likely to file an insurance claim.
I liked what someone in an earlier post had to say. If I drive responsibly, with no tickets or accidents, shouldn't my credit score go up?
I'd have to say that credit scores should only be used by companies that deal with CREDIT. Car insurance companies should not be allowed to use it. If having car insurance and being a safe driver can in no way improve a persons credit score or worthiness, then it should be illegal to use a persons credit score in setting car insurance prices.
]]>If only the credit score really was a reflection of responsibility. I don't borrow money and I have hefty savings and yet my credit score is awful. Because I don't have lines of credit, revolving credit, mortgage loans or anything else.
The score at its best, working in its most ideal way, only measures your willingness to accept credit and your responsibility with using that credit.
Once you take borrowed money out of the equation, the metric no longer holds.
]]>Chapter 7 really works out well if you are employed at a salary which is at or slightly above the "means test" and it's actually relatively easy to meet the means regardless of income- it's more of a "hoop jump" any good attorney can create a plethora of exemptions.
chapter 7 for the win(mostly). you won't be able to finance a car or a home for awhile- but leasing a car shouldn't be a problem and with the economy in the shitter it's unlikely that a BK is going to affect future job prospects.
]]>@wcnghj:
And this is the problem with credit reports/scores. A responsible person who saves up to make purchases and avoids debt (credit) will have a lower credit score and have a more difficult time obtaining credit for a major purchase (i.e. a mortgage).
]]>The age will remain for 10 years.
]]>@roanoke: Right. My credit isn't perfect. That must mean that I am the worst driver on the roads today, right? Even though I've had one speeding ticket (41 in a 35) in the last 10 years.
]]>@thompson: I bet you believe that because someone was late on his/her car payment three times in the last year it means that he/she would be the worst employee a company could hire.
I might be able to undertand it being considered for someone applying for a job in some sort of financial position, but beyond that, it's simply an invasion of privacy.
]]>Nice try, but no.
]]>What recourse do I have? I haven't suffered any damages from this, but I'm really creeped out. What's the point of the Fair Credit Reporting Act if there are no penalties for violating it?
]]>Credit reports are the result of so many factors out of your control, it doesn't accurately show how responsbile you are. For example, my credit card now wants to charge me a monthly fee. I've had the card for 18 years, have never been late, never carried a balance (which makes me a deadbeat in their eyes, but in the real world of responsible consumer activity I am right up there), and never paid a fee. Its the longest held card I have. If I do what I want to do, cancel the card and shop around because I don't want to pay extra fees, my credit score will go down because it will reduce the length and amount of credit. So, the credit card company is reducing my ability to make sound decisions and essentially is going to hold my credit score ransom and charge me a fee that I don't want to pay but have to because I'm in the market to buy a house and don't want my score to go down.
]]>I suggest that people who aren't shopping for a home, car etc. to freeze their credit (about 10 bucks per reporting agency). Not only does it keep the prying eyes of those who shouldn't have access to your credit report, it also reduces the chance of identity theft and 99.9% of the junk mail credit card offers will stop as well.
And, its cheaper than using a credit monitoring company (ID theft prevention) so instead of paying "Secure My ID" or "LifeLock" just freeze your credit.
]]>Besides, how's that jive with the fact that you may very likely have medical debt on there? That's a violation of privacy laws, since they aren't allowed to have that information without your consent.
What I do off the clock is none of their damned business unless they want to start paying me for that time. Having debt does not mean that you will start stealing from your employer.
]]>Credit scores however- should be just for these
credit and account reviews.
Credit reports and credit scores should only be used to determine a person's credit worthiness. If you are not borrowing money or working with large sums of money, it should be illegal for anyone to use your credit report and score to make a business decision.
]]>Oh, and to belabor my point, it was that while a study can show that legalized abortion is correlated with a reduction in crime, it is hardly the only reason for a reduction in crime (causative).
Much in the same way that a high credit score may be correlated with a reduction in traffic accidents, but is hardly the only reason for not having traffic accidents.
]]>@Stephmo:
I prefer most of the Freakonomics examples, since you're far more likely to shock someone out of a belief than you are to reason them out of it.
]]>@Trai_Dep:
The copy is on the shelf behind me. I didn't want to post an entire chapter. The increased funding for law enforcement (which includes prison build-ups) and legalization of abortion appear to be the major factors, however. While the crack "bubble" did burst, I consider that to be less of a factor than the other two/three.
]]>@Cant_stop_the_rock: Yes, but often you're in a position of such weakness, its not really an option. Do you want an apartment? Credit Score please. Do you want that job? Credit score. Do you want to keep your license? Credit score. Granted, we overuse credit in this country and some of this is due to the "I want it now" attitude where we'll agree to nearly any intrusion so we can buy something shiny RIGHT NOW. But more so, I tihnk its a way to have banks, insurance companies, etc. jack up rates in a quasi-legal way.
]]>@DrLumen: See my post above. We're often put in a position where we don't have a meaningful choice. Either submit to credit report or no new job, no renewal of your license, etc. So we become lazy about this type of data and enforcing our rights. Instead we chase the imaginary boogeymen that these industries invent for us that further help their cause. "Oh noes, the CRA forces banks to lend money to minorities who can't afford homes." [False, BTW].
]]>You really need to read up on bankruptcy before you peg it as a "Get out of debt free" card. Bankruptcy is anything BUT.
]]>It is going to become even more so with high unemployment and all those predatory no doc ARM loans coming home to roost. Bankruptcies are becoming more a sign of the times than the outlier that just decided to not pay their bills.
]]>Anyone can be screwed by the current system.
]]>This is way out of control. Congress needs to deal with it. This kind of thing and all the data collection and reselling both do nothing for the greater good. Credit reports should only be allowed for the extension of credit in a purchase and nothing more.
]]>The law states:
"Subject to subsection (c), any consumer reporting agency may furnish a
consumer report under the following circumstances and no other:
...
(2) In accordance with the written instructions of the consumer to whom it relates."
Essentially that means your credit report can be used for ANY reason as long as you consent to it being retrieved - unless there is some other law that specifically prevents it.
So if someone tells you they need to use your credit report for something that's not on the list it would not be accurate to tell them they're not allowed to use it. You can decline to give them permission, and they can tell you to go away.
]]>@roanoke:
Um, just an FYI roanoke, what you have described is a perfect example of the "post hoc, ergo propter hoc" fallacy. In other words "after it, therefore because of it." This is not always true. There are lurking variables to consider. Perhaps the area of the city they live in happens to have both a bad local economy (creating credit scores that are average or even good for that area but bad compared to the entire U.S.) and a dangerous driving environment.
The insurance companies would have to do an experimental study (with experimental and control group) to trust data like that.
]]>It might make sense with property (home) insurance, maybe people with a lot of debt might be more willing to burn down their home/store for the insurance money than someone with little debt. Maybe. But get into a car accident?
I realize it's just another lame excuse to charge some people more, I just think they should have to meet a high burden of proof in showing a need to use people's credit scores. A tenuous theory based on nonexistent data shouldn't be enough to permit it.
]]>Not only does the entire book discuss the fallacy of market prediction as a whole, but it goes back to the well of the studies that have "proven" tie width and skirt length correlations to market trends as well.
Essentially, it's really easy to make the correlation - but you're looking at what? Lagging indicators. Or did they do a good ten year study where they randomly sampled customers and followed credit scores and driving records all over the country and normalized all other factors?
]]>@Shoelace: For the most part, its already set up that way. The problem is that you're not given a meaninful choice. Don't want to submit to a credit check for that new job? Good luck getting it. Want to stay a doctor, lawyer, general contractor, etc. but don't want to submit to a credit report? Say goodbye to your licensing. Often the protections are in place, we're just not given a meaningful opportunity to use them.
]]>You should at the very least check out your credit reports at annualcreditreport.com
]]>Why should you pay less for you auto insurance or have an advantage in finding employment over someone who has a lower credit score or no credit history at all?
]]>Usually my finely tuned sense of cynicism allows me to figure out such things rather quickly. The only thing I can figure is that maybe they argue (and purchased some "study" to show) that people with bad credit scores are more likely to file fraudulent insurance claims. I don't buy that assertion for one second, and I don't think it makes any sense when you really think about it. But that's all I can come up with. You're prepaying the insurance premiums (usually in 6-month chunks), so it's not like any credit is involved. So what does creditworthiness have to do with the cost of getting auto insurance?
]]>@roanoke:
spanky said it, but I want to reinforce: correlation IS NOT causation. The best point I've ever seen, heard, or read on the subject is 'Freakonomics.'
If you haven't, you should definitely read it.
Best (and most offensive to some) example: A study of abortion rates shows that higher rates of abortion are correlated with much lower crime rates.
A deeper study shows that, for the period of time studied, law enforcement spending and techniques also improved dramatically.
So, while it is valid to say 'the data shows that increased police spending results in lower crime rates,' it is also valid to say 'the data shows that increased abortion rates result in lower crime rates.' The reality is, of course, that both had a hand in reducing crime.
Alternate example: "This rock keeps tigers away."
]]>I worry about my credit report being used against me simply because I avoid credit. I have no credit cards - the only thing that should show up on a report is my college and law school loans. I have no idea how this looks to potential employers, banks, etc - I've actually had people tell me that I should have and use a credit card responsibly if I want my credit score to look better when I apply for big-ticket loans (car, house, etc.)
]]>@thompson:
Some of the most responsible people I know have horrible credit scores.
There's an old saying: "shit happens." When "shit happens" on your credit report, it can takes many years to dig yourself out of that hole.
]]>@Trai_Dep:
"omgsocialist"
I figured someone was going to say it sooner or later!
]]>If credit reports were illegal, then lenders would have to assume everyone was a bad risk, and everyone would pay what people with 400 scores pay now.
As someone who has been responsible with credit, I'm glad credit reports exist.
]]>It is positively infuriating and disempowering to give three corporations the power to make or break an individual's entire life. Plenty of things can screw up a credit rating. Sure, plenty of bad credit ratings come from personal choices. On the flip side, things like domestic abuse can leave an individual in financial ruin if their abusive partner manipulates the finances as a way of making them stay.
Credit ratings are bunk. When this number affects the ability of an individual to procure a roof over their head (NYC is a great example of this - loads of people are unable to find legal housing because of mediocre credit ratings), we are edging into human rights problems here.
]]>I'm inclined to view that the way credit reports are used today in the United States (de facto) is almost akin to everyone treating each other as criminals, guilty unless proven innocent.
If credit reports are used to help make judgments for creditworthiness, fine. That was the original purpose of credit reports, wasn't it?
If credit reports are used for embellishment in conjunction with others sources of data, I can generally understand that much too.
However, when a solitary credit report is grounds for imposing all sorts of living hell for an individual (even with other sources of information portraying a different picture), that's the problem. The amount of weight placed on a single, questionable document in this country is criminal.
]]>I know, easier said than done but it is a valid point.
]]>Unless they can prove that there's causation, they should be prohibited from using it.
]]>Check out your local credit union. Ask if they have pre approved draft checks, this way you can find the car you want, fill out the check and be done :).
]]>Of course, if you apply for a loan and get turned down, you are then entitled to a free copy of the report and credit score that was part of the reason for your being turned down, if I am not mistaken.
]]>If you're getting your car loan from a reputable source (i.e. your credit union, and not repeat not the slimy car dealer), then you'll be fine.
If you are getting your credit from a slimeball car dealer, I wouldn't put it past them to 'invent' the fact that you have a "bad credit score" to justify a usurious interest rate. Avoid all that drama and get your loan from a reputable financial institution first. Or -- infinitely better yet for your financial health -- buy a third-party-inspected, reliable used car from a private individual for cash. A new car, and to a lesser extent, a "retail-priced" used car sold by the dealer, are some of the worst financial deals out there.
]]>Europe is touted as having strong data protection laws. Does anyone know if the whole "credit report" industry even exists in Europe? If so, how does it differ from its US counterpart? Seems like there would be some lessons we could learn there.
]]>People with good credit should be rewarded. I have scores in the 800s with all 3 bureaus, and when I went to apply for a non-conforming home loan this summer, it was easy as pie, in part due to my good credit. It was a good feeling!
]]>@thompson: I do not agree with this practice as it is possible for people to be unfairly judged by a credit report. I have had friends in abusive situations that have had their credit trashed. Yes, they got out but it is going to take forever for credit to rebuild and they should not be judged or have to devulge what happened in the mean time.
]]>@Gorphlog: Just FYI, credit reports do not include income amounts. As to insurance, there is actually a statistical correlation between credit score and driving record.
]]>So far, almost all the inquiries have been legit, but we did catch a car dealership who pulled a report even though we came in with preapproved credit and they were contracturally forbidden from doing so.
I saved a copy of this list in the (encrypted & well backed-up) folder where we keep the reports. As usual, it pay$ to read Con$umeri$t.
]]>With that said, I also think it's too easy for things to get screwed up on your CR and that there should be more regulation of both the addition of information and the dispute processes.
]]>