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Credit Reports
The Credit Report is one of the most misunderstood investigative tools in our industry. Whether referred to as a Credit Report, Credit History, Credit Check or a Consumer Credit History, this information represents an individual consumer’s credit history, chronicling a personal history of debt and payment.
A Credit History report contains details about a consumer’s credit accounts, including the names of the accounts (i.e. the issuing Bank or store), each account’s payment details (i.e. current or previous late payments, accounts in collections), and public records associated with the consumer (i.e. tax liens, civil judgments, collections, etc.). It identifies each account as installment or revolving, and gives an indication of the total indebtedness of a consumer.
How This Is Relevant in Due Diligence Investigations
Because credit reports contain so much valuable information, they can be excellent tools in evaluating an individual’s character and the subject’s history regarding handling of one’s personal obligations.
Two subsections of the Fair Credit Reporting Act (§ 604: Permissible purposes of consumer reports) explicitly permit the use of consumer credit reports for business needs.
Fair Credit Reporting Act Allows
- Employment This includes usage in decision making regarding hiring, promotion, reassignment or retention.
- According to Federal law, a Credit Reporting Agency may not release a credit report for employment decisions without the signed consent of the consumer on whom the report is based. Please visit our sister site Employer’s Choice Online for employment credit reporting needs.
- Legitimate Business Needs For information in connection with a business transaction that is initiated by the consumer.
- In such instances, DRM, Inc. requires a release signed by the consumer authorizing the use of the credit report for a legitimate business need.
Whether starting a new partnership, considering a business relationship, or reviewing potential acquisitions, a thorough due diligence investigation, including a credit check, can make a significant impact on the outcome of the business decision.
Permissible Purposes
- Granting credit
- Debt collection
- Insurance underwriting
- Employment purposes (see above)
- Governmental issuance of certain licenses as required by some government agencies
- Legitimate business transactions between a business and a consumer
- Personal credit check (a consumer may request their own credit report at any time)
Our credit reports are conducted in compliance with the Fair Credit Reporting Act (FCRA) and all applicable state and Federal laws, in accordance with the laws of other countries when applicable.
Finally, it necessary to note what credit reports cannot be used for, as we regularly receive inquiries requesting credit reports without proper permissible purposes.
Non-permissible Purposes
- A consumer requesting another consumer’s credit report (checking on daughter’s boyfriend, for instance),
- Obtaining a credit report under false pretenses (i.e. claiming it is for a legitimate business need when it is not; misrepresenting oneself as a consumer requesting a report on himself; using one’s employer as a cover for obtaining current information on a delinquent child support payee, etc.), or
- Presenting a falsified signed release form purporting to give the consumer’s authorization.
Obtaining a credit report under false pretenses or improper use of a credit report is a violation of Federal law and can result in criminal and/or civil prosecution.
Smart employers make good hiring decisions using all the available information; credit reports are too full of usable information to ignore. Employers have many reporting agencies from which to choose. We encourage you to compare our sister company, found on the Internet at Employers Choice Online.com with all other background check providers.
