Who Can I Run A Credit Report On?
A credit check can be very helpful in organizing personal finances, but under certain circumstances, a person or organization might need to run a credit check for other reasons. If you’re interested in running a credit check on another person, you should be aware of how Federal law affects your ability to do so. You’re only allowed to run a credit check under very specific circumstances.
The most important thing to remember is that you’ll need to follow FRCA (Fair Credit Reporting Act) regulations. These regulations were introduced to help prevent practices that could result in identity theft or other unfair and harmful uses of the account numbers and other information contained in a credit report. As a result, credit checks are only available if you have power of attorney over a person, if they’re a child in your custody, or if you get their express permission and have a valid professional reason for obtaining a credit report.
One such professional reason is to gather information about an employee or independent contractor before hiring that person to do work. Many companies run credit checks on their employees, especially if those employees have large financial responsibilities, and this is allowable under FRCA law. However, there are limitations in place to protect employees from potentially predatory practices. Employers aren’t able to access the full credit report of their employees in many circumstances, but instead have access to a credit header that provides some of the information contained in a credit report. Again, it’s necessary to have the employee’s written permission in order to see this credit header.
Credit checks may also be ran by parents and executors of wills. Parents who run credit checks need to have the permission of adult children. Executors of wills will not usually run credit checks except in very specific circumstances. Some businesses run credit checks on customers; the resulting credit reports will have limited information about account numbers, and the credit reports must be handled in a very specific way to prevent the possibility of identity theft. Identity theft from poor report handling will result in penalties and fines for the business that requested the report.
The individual penalties for illegally obtaining a credit report can be severe and can include a prison term of 1-2 years. This is why it’s important to stick to the right procedures. Before you ask for a report on a person, make sure to have their written permission and follow FRCA guidelines for handling the report.