Ordering Credit Reports

For a more detailed discussion on the legalities involved, please see Legal Aspects of Consumer Credit Reports.

As a rule, if you have a legitimate business need to pull a credit report on someone, you can do so! In other words, if you are loaning money to someone, employing someone, renting an apartment to someone, entering into some business transaction with someone, etc., you are risking loss of capital, or worse. In these, and other, cases you should be able to order a credit report on the individual(s) you are about to do business with.

However, keep in mind that, unless your need involves collection on a credit card debt, you must have an individual's permission to order their credit report. The operative phrase is that consumer credit reports should be initiated by the individual who is the subject of the credit report.

You cannot order a credit report for just informational or non business-related purposes. That means that, barring extenuating circumstances, you cannot order a credit report on your family, friends or co-workers, etc. To do so would be an invasion of their privacy.

Permissible Purposes Of Reports (Section 604)

A consumer reporting agency may furnish a consumer report under the following circumstances and no other:

• In response to the order of a court having jurisdiction to issue such an order. Section 604(a)(1).
• In accordance with the written instructions of the consumer to whom it relates. Section 604(a)(2).
• For the extension of credit as a result of an application from a consumer, or the review or collection of a consumer's account. Section 604(a)(3)(A).
• For employment purposes, including hiring and promotion decisions, where the consumer has given written permission. Section 604(a)(3)(B) and 604(b).
• For the underwriting of insurance as a result of an application from a consumer. Section 604(a)(3)(C).
• Where there is a legitimate business need for the information in connection with a business transaction initiated by and involving the consumer. Section 604(a)(3)(F)(i).
• To review a consumer's account to determine whether the consumer continues to meet the terms of the account. Section 604(a)(3)(F)(ii).
• To determine a consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant’s financial responsibility or status. Section 604(a)(3)(D).
• For use by a potential investor or servicer, or current insurer, in a valuation or assessment of the credit or prepayment risks associated with an existing credit obligation. Section 604(a)(3)(E).
• For use by state and local officials in connection with the determination of child support payments, or modifications and enforcement thereof. Section 604(a)(4) and (a)(5).
• For use by an employer or a company or a corporation in connection with the determination of whether he or she should be employed for the available vacancy or job.
• For use by collection agency or judgment recovery in connection with the determination of locating the debtor, other related information revealed on the credit report, etc.
• For use by an landlord, rental agency, a leasing company, lending or mortgage company or for rental or leasing purposes with the determination of whether he or she or the owner of the company/business/firm/corporation should be leased or rented the tangible property or is eligible for a mortgage or loan.