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Credit Pull Disclosures Must be Conspicuous–But Only If Your Permission is Required

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It is often suggested that when you apply for credit, and your credit is pulled, it negatively impacts your credit score. One credit inquiry here or there won’t damage an otherwise good credit rating, but loads of them in a short period of time certainly can.

That’s why the Fair Credit Reporting Act creates limitations on how, where and when your credit can be pulled. If your credit is pulled illegally, you may be able to sue for damages to your credit.

Permissible Purposes

We’ve previously written that a company must have a “permissible purpose” to pull a consumer’s credit, and that if it does, the company doesn’t need your permission. If you apply for a loan, or to rent an apartment, the companies may ask your permission, but they don’t need to.

Some recent cases have made the ability to pull credit even stronger. In one case, a woman who was looking to buy a car asked that the dealer only pull her credit with one company that she knew she was pre-qualified with. Sure enough, the company pulled her credit with multiple lenders, and she sued.

The court ruled against her, saying that because her consent was never legally needed in the first place, her instruction to only pull credit with one company was not binding on the company, and it was not a violation of the FCRA to violate that instruction.

Your credit can even be pulled where you expressly say you don’t want it pulled, so long as there is a legitimate business purpose. In another recent case, the parties agreed that a consumer’s credit wouldn’t be pulled. The company pulled the consumer’s credit, but the court held there was no FCRA violation because the consumer was applying for a loan, and thus, there was a legitimate business purpose.

Consumers who find credit pulled against their express wishes, or in violation of an agreement by the company, may still have remedies. Basic breach of contract remedies may apply, as may state laws that govern deceptive and unfair trade practices.

Employers Pulling Credit

Employers often pull credit, and the FCRA governs when and how this can be done as well. Employers who pull credit must provide a specific disclosure to applicants, which must be conspicuous to applicants.

Stanford University has been sued a number of times over lawsuits alleging that its disclosure was so broad and over-inclusive that it was not conspicuous to applicants that their credit would be pulled. Other companies have been sued on the basis that the disclosure was not a stand alone document, as it should be, but rather was buried in documents containing other often unrelated information.

Has there been a pull of your credit by a company you don’t recognize, or which you did not authorize? Contact Jacobs Legal in Miami today to discuss your credit and the rights you have to protect having your credit unnecessarily checked.

Resources:

esrcheck.com/wordpress/2018/11/09/stanford-university-faces-class-action-lawsuit-alleged-fcra-violations-background-checks/

scholar.google.com/scholar_case?case=5783274000033130046&hl=en&as_sdt=6&as_vis=1&oi=scholarr

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