Permissible Uses of the Credit Report

Permissible purpose is defined in Section 604 of the Fair Credit Reporting Act (FCRA). [15 U.S.C. § 1681b]Canon Power Shot Black 12.1 Megapixel Digital Camera - 5251B001Flip Video MinoHD High Definition Digital Camcorder F460C

Permissible Uses of the Credit Report

The FCRA limits the use of the credit report to certain purposes. They are:

• Applications for credit, insurance, and rentals for personal, family or household purposes.
• Employment, which includes hiring, promotion, reassignment or retention. A CRA may not release a credit report for employment decisions without consent.
• Court orders, including grand jury subpoenas.
• "Legitimate" business needs in transactions initiated by the consumer for personal, family, or household purposes.
• Account review. Periodically, banks and other companies review credit files to determine whether they wish to retain the individual as a customer.
• Licensing (professional).
• Child support payment determinations.
• Law enforcement access: Government agencies with authority to investigate terrorism and counterintelligence have secret access to credit reports.

Specific prior consent is required before consumer reports with medical information can be released.

Target marketing is not a permissible use of credit reports. Currently, both Equifax and Experian are in a consent agreement with the FTC to not use credit reports for target marketing. Trans Union attempted to challenge the FTC prohibition on using credit information for target marketing but failed in Trans Union v. FTC.

Accountability

The FCRA affords individuals a private right of action that can be pursued in federal or state court against CRAs, users of credit reports, and furnishers. In certain circumstances, individuals can obtain attorney's fees, court costs, and punitive damages. Additionally, the FTC can enforce provisions of the act. Criminal penalties can be brought against those who knowingly and willfully obtain a consumer report under false pretenses.

FCRA does allow consumer credit information to be used for prescreen marketing efforts, which require the lender to provide a firm offer of credit on each consumer lead received (see Section 615(d) of the Fair Credit Reporting Act (“FCRA”).  I’ve attached our firm offer guidelines & prescreen addendum which address those uses.