I often face a question from my clients, who are in debt about can a collection agencies permitted to pull credit report? One might be thinking what does one loses when a debt collection agency tries to pull out your credit report? Yes, you have a right question. In general, a request for credit report is performed when you apply for a new credit. The more the number of credit check performed implies more attempts one had made to open a new line of credit. This will impact when you really apply for credit in any point of time.
Yes debt collector can surely pull your credit report but that action should involve a ‘credit transaction’ in which consumer directly sought for credit from creditor or collector who pulled otherwise the attempt to pull the credit report can be surd in court of law.
This rule was given by court when one consumer appealed court concerning the credit report checks one that does not involves seeking credit directly by the person who filed a case in court of law. This is the case when the car was towed for registration violation and sold. In this sale, the proceeds of the sale did not cover the towing and impound charges. In an attempt to recover those charges the towing company assigned the collection agency to recover the outstanding amount.
In this case, the debt collector to asses the debtor capability to repay the outstanding amount pulled out credit report. As in this case the consumer did not seek credit directly, the debt collector is not permitted to pull out the credit report. As a result the consumer continues to receive non-stop collection calls.
To protect himself from harassing calls from sued debt collector under the fair credit reporting act on the grounds that they are not permitted to pull his credit report in instance of no direct credit seeking transaction. In the interest of consumer protection concerning when the creditors trying to pull out the consumer credit report issued a ruling that creditor can only pull credit report if the debt involves a direct credit transaction.
After this ruling from court, the credit reporting agencies made a strict restriction regarding credit check to prove that the request for credit report is made for one of the reasons. The credit check can be accessed by a landlord when you and landlord is entering into a tenancy agreement or renewing it. The other case where the credit check can be performed is during the insurance buying, by employer for hiring a person, or any other case as per the law, where the direct business is in need of information.
In case the collection agency requesting a credit report, it should provide an evidence of being appointed to collect the outstanding debt and prove that debt involves a direct transaction then only it is able to pull your credit report from credit reporting agencies without your permission.
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