Fair Credit Reporting Act
The Fair Credit Reporting Act is a federal law that governs credit reports and background checks. Potential and current employers, landlords, and creditors may, in some circumstances, obtain credit reports. The information in those reports, therefore, must accurate. Creditors who report negative, inaccurate, or misleading information can be liable under the FCRA. If you were rejected for a job or an apartment, denied credit, or offered unfavorable credit terms because of an error on your credit report, you may have a claim for damages against the credit reporting agency. Contact us to discuss your options with an attorney.
In addition, companies that contract with credit reporting agencies may only make hard inquiries of consumers in certain circumstances “and no other.” The circumstances authorized by the FCRA include:
When the consumer has given written consent;
When the company making the credit inquiry “intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer,” and
When the company making the credit inquiry has a legitimate business need for the information “in connection with a business transaction that is initiated by the consumer” or “to review an account to determine whether the consumer continues to meet the terms of the account.”
However, a creditor or potential creditor is not allowed to make a hard inquiry of prospective litigants to assess whether and when to file a lawsuit or whether they are collectible. If a potential creditor, such as your HOA, has made a hard inquiry into your credit, you may be entitled to damages for the resulting harm to your credit score. This is true whether or not the creditor actually followed through with a lawsuit against you. And even if your credit score was not affected, or minimally affected, you may still be entitled to statutory damages. If you believe someone has pulled your credit in violation of the FCRA, contact us to schedule a consultation with an attorney.