Definition
An individual or entity has a permissible purpose to request a credit report when they are authorized by the consumer to pull the report, or when they have reasonable justification for doing so.
Analysis
Credit bureaus are restricted by the Fair Credit Reporting Act (FCRA), which lists the situations in which a credit report may be released to a third party. According to § 604 of the FCRA, these are permissible purposes by which credit bureaus may release consumer credit reports:
- In response to a court order
- In response to written instructions by consumer to whom it relates
- To a person which they have reason to believe:
- intends to use the information for a credit transaction involving extension of credit, review or collection of an account, or
- to review for employment purposes, or
- to use in underwriting for insurance purposes, or
- to determine eligibility for government license or benefit in which an applicant’s financial responsibility or status must be confirmed, or
- intends to use the information as a potential investor or servicer, or current insurer, in connection with a valuation of, or assessment of credit or prepayment risks associated with an existing credit obligation, or
- otherwise has a legitimate need for the information for business purposes
- in connection with a business transaction requested by the consumer, or
- to review an account to determine whether the consumer continues to meet terms of the account
- In response to a request by the head of a State or local child support enforcement agency, or their representative as long as the agent certifies that
- the credit report is needed to establish an individual’s capacity to make child support payments
- the paternity of the consumer has been established
- at least 10 days’ prior notice has been provided to the individual by either registered or certified mail to the last known address, and
- the details will be kept private and confidential, and will not be used for any other purpose
