In the fine print of many loan applications, lease agreements, and other financial documents there is often a much-overlooked “credit check” clause. This clause stipulates that the lender, landlord or financial institution be allowed to check the other party’s credit history. Many individuals do not fully understand what a credit check is or why one is required in such agreements.
Credit history can be a very important factor for things like allowing someone to rent an apartment or loaning money for a business, and credit checks are the method by which this information is obtained about a person’s credit and payment history. You would want to feel secure that someone would likely pay you back, wouldn’t you?
Credit checks involve sensitive personal data. Therefore, many people are concerned about precisely who they’ve entrusted with their records. Fortunately, the Fair Credit Reporting Act has established unambiguous rules governing credit checks. Your credit data will be accessible to any business giving you a line of credit, to your creditors themselves, and to your insurers.
Your employer does not have the right to look at your credit history unless you give them specific written permission. Accessing someone’s credit history, even that of an employee, is against the law. If you find that someone has looked at your credit history without permission, the law allows you to take them to court.
It is possible for you to perform your own credit checks on your own credit history. The Fair Credit Reporting Act states that you have a right to know what each of the credit reporting companies have on record about you.
It can take up to fifteen for you to receive your credit history but once it arrives you will be able to see what kind of information is used to evaluate your financial status. One of the more important things in your credit history is your credit report scores. These are the numeric representation of you entire credit history. Many loan applications ask for you to provide a credit report with score in order to better quantify level of risk as an investment. By knowing this score ahead of time you can gain a leg up in loan applications.
Once you understand the detail of your credit history it is easy to see why so many financial organizations what to review it before doing business with you and by knowing who can and can not access your most private finical data you can better protect yourself and your credit history form those who would use it for nefarious means.
Credit history is a very important factor for everything from renting an apartment, to obtaining insurance, or borrowing money for a business. Credit checks are the method by which this information about a person’s credit history is obtained. Under the Fair Credit Reporting Act, all Americans are entitled to request their own credit histories, free of charge, once per year from each of three different credit reporting companies. The higher your credit report scores, the better the credit risk you are. To protect yourself from identity theft, it is vital to know and understand your credit report with score, and how to control access to it.
- Daniel Lesser
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