Who checks our credit ratings?

[Joan.of.the.Arch]

A couple of threads by one of our posters here made me wonder---

If employers sometimes check credit ratings of potential employees as a way of guaging their reliability and safety as dedicated employees.....then might a potential business client check credit ratings on us?

Perhaps a list of who might check our credit ratings would be of interest here.

[disneysteve]

It is important to realize that nobody can check your credit without your consent. I can't just order up a report on Joan.of.the.Arch anytime I want to. When you apply for a job, something you sign in the process gives permission for that credit check. When you apply for a loan or credit card, the application gives them permission. Same for when you apply to rent a home. So a potential business client couldn't check your credit unless the client had you sign written consent to do so.

[Joan.of.the.Arch]

That is what I understand, too. But some businesses keep a contract with the credit bureaus because they have reason to do frequent checks. I would not be surprised if permissions get faked on occasion and we would never know about it. I doubt if it is something that happens to many people, but I bet it does happen.

[disneysteve]

That is what I understand, too. But some businesses keep a contract with the credit bureaus because they have reason to do frequent checks. I would not be surprised if permissions get faked on occasion and we would never know about it. I doubt if it is something that happens to many people, but I bet it does happen.

True. If my business were one in which I did frequent credit checks, I might be able to check on somebody who I really shouldn't be checking on. I'm honestly not sure how that works or what info is needed. If the SSN is needed, then I'd have to have access to that, which I probably wouldn't have, but I guess it depends on the situation.

[wincrasher]

It also matters if they do a "hard" or "soft" inquiry.

I don't care about the "soft"ones, because they don't hurt your score. I manage all my "hard" inquiries.

I'd think twice about doing business with someone who does unauthorized checks on you. What else are they doing without your consent? Looking at your cell phone records? Reading your emails?

[Joan.of.the.Arch]

Obviously, I would not know about it going on.

[ScrimpAndSave]

I'm a little addicted to creditkarma.com even though it isn't totally accurate.

[kork13]

I'm a little addicted to creditkarma.com even though it isn't totally accurate.

haha I'm the exact opposite... I've checked my score once, right before I rented my previous apartment, but otherwise I have no interest in knowing what it is. I keep an eye on my credit reports to make sure they stay clean/correct, but the score is meaningless to me, since I don't have the need right now to keep a stellar one, and won't for at least a few years (moving overseas soon, where FICO isn't used).

to the main topic, it's also of note that once you've given that permission to somebody, they can realistically check it anytime in the future at will. My insurance has only gotten that authorization from me once, but they check my credit every time I renew.

Another question though.... If it's (legally) impossible to get the credit score without the person's authorization, how do CC companies get access to your score? They target what offers get sent out to people based on their credit scores, so..... ?

[Seeker]

Section 3 guys.

Only employers or prospective employers may need written consent. The rest (including Insurance companies) do not need written consent. It's a courtesy for them to ask and let you sign, but they do not need to get your okay if they can prove a business need to know.

How Private Is My Credit Report? | Privacy Rights Clearinghouse

In practice, most potential creditors ask for your permission to review your report.

[Seeker]

Another question though.... If it's (legally) impossible to get the credit score without the person's authorization, how do CC companies get access to your score? They target what offers get sent out to people based on their credit scores, so..... ?

And section 5 first two paragraphs answers this question Kork13.

The Credit Reporting Agencies need to make money too.

How Private Is My Credit Report? | Privacy Rights Clearinghouse

[myrdale]

I work at a small family owned chemical plant. On occassion I will set up an account at a parts vendor. When I do they run a credit check on the company, in addition to ususally wanting 3 references or some mix match of the like.

[cicy33]

I don't think it is fair to base my insurance premium on my credit score. If I don't pay the bill, they cancel me. simple as that. not a problem for me but still. and I don't buy that people with bad credit scores have a higher accident rating. I have not had one accident that was my fault at all. I am now 42 and I will be the first to admit I do not have good credit. I think that there are some people that do have accidents just to get money but I don't like being lumped in with criminals. That is like saying that anybody who has a bad credit score is likely to rob someone. Interesting thought, what if with all this stuff about cutting limits and raising payments lowers peoples scores enough to increase insurance premiums or whatever. Will people sue? I don't personally think I pay too much for insurance but then again what do I base it on? I have full coverage on one jeep grand cherokee, min on a pup truck, and I pay around 727 for six month. my renters is 318 every six months. It did go up this year but that was after we had a serious disaster here and I was told it affected rates. I moved back home right about the time it happened and couldn't call to change stuff until after the power and stuff had been restored. (4 days later) I was also informed that the Pup truck we got,even though it was small was considered high risk in the damage reports that were reported on this type of vehicle.

[am_vanquish]

I don't think it is fair to base my insurance premium on my credit score.

Insurance is just a large grouping of probabilities. Most all insurance policies (whether or not they incorporate your credit score) have a built in premium for "lapse rates" - the probability someone doesn't pay the company.

The logic in incorporating credit scores into insurance premiums is allocating these lapse premiums to those people most likely not to pay (and not punishing those people who are very likely to pay). It has nothing to do with whether or not you've got a higher accident rating. For those with good credit, they're not carrying the weight of everyone else. For those with lower credit, they're paying the insurer a little extra for the risk of non-payment.

Is it fair? I'm still a bit undecided ... I can see both sides. The company loses money when policies lapse, so they deserve to charge an extra premium. However, there are several "grey" areas where this information can also be abused. My ideal preference would be to have the insurer ask your permission to incorporate your credit score in their underwriting process.

However, in my experience (which is admittedly very little), the lapse rate portion of your insurance premium is a relatively small % of your total premium.

[disneysteve]

I don't buy that people with bad credit scores have a higher accident rating

It isn't that people with bad credit are more likely to have accidents. It is that people with bad credit are more likely to file claims.

I wouldn't file an auto insurance claim for anything short of a catastrophic event. Between the deductible and the risk of my rate shooting up, I wouldn't file a claim for anything under a few thousand dollars. I'd rather pay that stuff out of pocket. Statistically, folks with bad credit are more likely to file claims when something relatively minor happens, even if it only exceeds their deductible by a few hundred dollars. I'm not sure, but I suspect folks with bad credit might also be more likely to take policies with low deductibles, putting more risk on the insurance company.

[Like2Plan]

Obviously, I would not know about it going on.

If you sign up for a credit monitoring service (of the 3 main credit bureaus), the service will notify you anytime there is a credit check....
(Mine also sends notice each month when there have been no changes. )