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When Can Debt Collectors Access Your Credit Report

On Behalf of | Oct 24, 2012 | Consumer Protection

We hear many complaints from consumers concerned that a debt collector has gained access to their credit report.  Given that the consumer originally dealt with a creditor, and did not ever deal with the collector directly, they wonder why it is that the collector can dig into your personal, private credit

Pursuant to the Fair Credit Reporting Act, only companies that have received an application for, or entered into an agreement with the consumer for, the providing of credit, insurance or employment may access the
consumer’s credit report.  However, debt collectors in many instances pull the credit report instead of the creditor.  This is because the debt collector, assigned the obligation of collecting the debt, stands in the shoes of the creditor.  If the creditor had the right to pull the credit report, then so does the collector.

However, what happens when the original creditor could not pull the credit report?  When a person goes to a hospital or doctor’s office, the medical facility is not extending credit, employment or insurance.  The medical facility has no right to access a consumer’s credit file to determine the ability to pay the bill.   Therefore, the collector that is assigned to collect on the account has no right to access the credit report of
the consumer.  The same holds true for collectors of parking tickets, municipal fines, or back taxes.  If a collector that is chasing one of those debt gains access to the consumer’s credit report, there is likely a violation of the Fair Credit Reporting Act.

This brings up another issue.  The collector is allowed to pull the credit report for a “legitimate business purpose” and that phrase has been widely accepted to mean that the review of the credit report is to determine the ability of the consumer to pay the debt.  We have had calls from consumers in the past
complaining about the way in which the credit report was being used.  While often times the collector would sit on the phone with the consumer and point out the availability of room on a credit card to make a payment, we hear complaints that the collectors have gotten outright abusive.  Some have reported
that the collector used the opportunity to mock or harass the consumer about their credit report – sort of picking on the consumer for their economic shortcomings.  There have been complaints that the collectors would sit and laugh at the consumer over the phone and belittle them for their lack of credit and any
hope in the future.  Is this a legitimate business purpose?

We have had some success  in making the argument that the credit report was not pulled for a legitimate business purpose, but being pulled for the purpose of harassment and abuse.  Obtaining access to a credit report for the purpose of harassment and abuse is not a permissible purpose to access a consumer’s credit report.

Are collectors pulling your credit report?  Are you concerned that this access to your private information is
unpermitted by law?   SmithMarco, P.C., has over 30 years of combined experience practicing law protecting the rights of consumers around the country.  Contact  us for a free case review.