More people are becoming aware of the significance of maintaining an outstanding credit score. That is why many are regularly accessing their credit reports and try to keep positive rating. Aside from knowing the negative and positive impact of credit score on personal finances, it is also important to know who might check your credit score. Essentially, your credit score is a numerical summary of how you can manage your finances and is a crucial indicator of the risk involved when you apply for loans.
So who might check your credit score?
Basically, any individual or business with “legitimate business need” can view your credit score. The qualifier “legitimate business need” could be general term to those who can check your credit rating, and organizations and individuals that belong to this category are: present and possible employers (with your permission), landlords, government agencies, insurance companies, child support enforcement agencies, car and mortgage loan lenders, and credit card companies. To put this simply, anyone who needs to make a decision to extend you credit can check your credit score and credit report.
Can a credit score be checked other than determining creditworthiness?
Unfortunately, this can happen. The three credit reporting agencies in the United States – Equifax, Experian and TransUnion – are permitted by law to make a list and sell it to insurance and credit companies for pre-approved credit offer. Moreover, most of us, regardless of our credit report, have received numerous unsolicited credit offers in the mail. It is part of their marketing strategy.
However, these credit reporting agencies are not allowed to collate and sell data gathered from credit scores for direct marketing purposes. In the past, credit agencies have done this practice, but the cases of abuses of using credit scores resulted to a ruling against the practice in 2000 as directed by the Federal Trade Commission.
Meanwhile, there are some personal details that should not be included in your credit report as guaranteed by law. These details include your race, age, marital status (if the report is being requested by a possible employer), medical records or history (no one can view this without your permission), debts that have been more than seven years old, and notices of chapter 11 bankruptcy that are more than 10 years old. There are also other details that may vary from one state to another, so be sure to check your local regulations on credit reporting.
It is crucial to take note that every time that an agency or an individual requests access of your credit report, the request will be noted in the report itself. If there are too many requests within a short period of time – for example, if you submitted an application for credit card, and then rented an apartment, and you have applied for a store credit card, etc – these things can have negative impact on your credit rating and unless you tackle them with credit repair, your score will go down. In the mindset of a lender, receiving too many requests for credit is an indicator that you are in a desperate situation. Also remember that you can also check your credit files, so be certain to obtain your copy of credit score regularly. This is important for you to check if there are inconsistencies or false charges filed against your account.
Good credit rating equals lower insurance rates
Insurance companies offering coverage for car and homes are also checking credit scores as part of their standard procedure. They need the information, because they claim that an outstanding credit report indicates that the applicant is not a risky. Maintaining a credit rating may earn you reasonable rates and qualify you for better coverage. On the other side of the coin, a poor credit rating may influence your premiums. Rising cost of healthcare insurance also led to providers to check credit scores with medical records. It is apparent that delinquency on payments is another factor they check.