Monday, June 28, 2010

Who Is Looking At Your Credit Report?


Most of us realize that when we borrow money, creditors access our credit reports to determine whether to lend us money. But who else looks at our credit and why would they need information about our credit?

First, you should be looking at your credit report at least once a year to check for accuracy, especially with the rise of identity theft. Reviewing your credit report once a year and knowing your rights are some of the most important steps you can take to safeguard your credit and privacy.

Credit reports are a gold mine of information about consumers. They contain Social Security number, date of birth, current and previous addresses, telephone numbers (including unlisted numbers), credit payment status, employment, even legal information. However, they do not medical information. In the case the report is requested by an employer or potential employer, it will not contain information related to age, marital status or race.

The Fair and Accurate Credit Transactions Act of 2003 (FACT Act) allows consumers to request a free copy of their credit report annually from each of the three credit bureaus - Equifax, Experian, and TransUnion. Reports can be ordered online at http://www.annualcreditreport.com/.

So, why are you reading about this in an international trade blog? Good question. There are two reasons – your employer and the government.

The federal Fair Credit Reporting Act (FCRA) and state laws restrict who has access to your sensitive credit information and what uses can be made of it. The following is a list of parties that can access your credit report. Pay close attention to 4, 6 and 8.

1. Parties considering granting you credit.
2. Landlords.
3. Insurance companies.
4. Employers and potential employers (but only with your consent).
5. Companies with which you have a credit account for account monitoring purposes.
6. Those considering your application for a government license or benefit if the agency is required to consider your financial status.
7. A state or local child support enforcement agency.
8. Any government agency (limited usually to your name, address, former addresses, current and former employers).

Let’s take a look at employers first. Some of our readers may be looking for a new job or a promotion with their current employer. Some employers use credit reports to screen applicants as a general indication of an applicant’s financial and personal integrity, while some also review them when considering promotions to sensitive positions. For those of you who are members of C-TPAT, look at your business partner and personnel requirements. In the best practices materials, CBP suggests verification of financial soundness of business partners and background checks including financial history on employees. Therefore, if your employer is a member of C-TPAT, it is likely that they have reviewed your credit report. This should also put you on notice that if you apply for a new job with another company, they may also review your credit report. If you are looking for a job, this is another good reason to review your credit report and correct errors that you may find. Note that employers and potential employers may only check your report if you provide permission. Do you remember reading the small print in one of those documents you signed?

Next, we will look at the government. For those of you who are taking the Customs Broker Exam or are awaiting your license, guess what? CBP wants to review your credit report too! Although not specifically included in the CFR, CBP states that the background investigation includes a review of character references, credit reports and arrest records. This review relates to business integrity, which is specifically referenced in 19 CFR 111.14. Question 15 on the CBP 3124 asks about debt and bankruptcy. While negative information on the credit report might not disqualify you from obtaining your broker’s license, it’s another good reason to check your report and try to fix any inaccurate entries. Notice that the government does not seem to need your consent to probe into your background. The signature block does not give them permission to perform the background check; it just certifies you have provided accurate information.

If you want to know who has been looking at your credit report and review your credit history, it’s time to request your report. In addition to the information about your credit, you will find that the report contains information on any credit inquiries within the past 12 months.

3 comments:

Jennie said...

Thank you for this very informative article of yours. You have explained everything well. I appreciate that you shared this to us.
eversince my credit card hacked i now always get my credit report score to check if there is any incorrect items on my report.

Anonymous said...

Hi Wizard, thanks for the blog post on credit history. The CBP form 3124 for Broker license application asks if the applicant has filed for bankruptcy "in the past five years”. Should there be concern regarding a past Bankruptcy that is close to 12 years old, no longer reported by any of the three agencies, and when the applicant currently has a good credit report (720 – 750 – 705). I’m assuming although it has long since fell off my credit history it will still be visible to somebody performing the back ground check. How should such an issue be brought up during the License interview process? Should that information be volunteered if it is not brought up specifically? I have concerns regarding the blanket “is there anything else you would like to tell us questions”. I have no issue discussing it if it comes up and I don’t want it viewed as withholding information if it does not. Any advice you can offer would be greatly appreciated.

Boskage Wizard said...

Wizard on Bankruptcy

A 12 year old bankruptcy and current good credit will not likely affect your license. Your current good rating demonstrates your efforts to improve your credit.

We can't know everything that goes on in the minds of the investigator, but we do know that business integrity and personal character are identified in the regulations. Lying and getting caught in a lie would not demonstrate good character. If the application requires 5 years, then there is no need to volunteer 12 years. However, it's important to pay close attention to the questions asked in the formal interview. If the investigator asks about bankruptcy, pay attention to how the question is asked. If he or she asks if you've filed bankruptcy in the last five years, then your answer would be "no." If he or she asks if you've ever filed bankruptcy, then the answer should be "yes." The investigator probably already knows the answer and may be testing you to determine whether you will tell the truth.

Many years ago, the Wizard was acquainted with an individual who wasn't forthcoming with information about a minor drug incident when asked about drugs. Although the incident in question would not have precluded issuance of the license, the failure to disclose the information didn't do much to show good character.

Good luck!