Credit glossary
Permissible purpose
A legal reason, listed in 15 U.S.C. 1681b, that a company must have before it can obtain your credit report.
The FCRA lists the reasons a report can be furnished, including a credit transaction you started, reviewing or collecting an existing account, employment with your written permission, insurance underwriting, a legitimate business need in a transaction you initiated, court orders and certain government uses. Prescreened offers are allowed under a separate provision that lets lenders get limited lists for firm offers.
This is the test for an inquiry you don't recognize. If a company pulled your credit without a permissible purpose, ask it to request removal and dispute the inquiry with the bureau. If the inquiry came from someone applying in your name, that's identity theft, and the FCRA's block process applies. Employer checks need your written authorization first.
Guides that go deeper
- Removing hard inquiries you didn't authorize, the legitimate wayAn inquiry you never authorized can be disputed, and one from fraud can be blocked. One you did authorize can't. How to sort them and fix each kind.
- Hard vs. soft inquiries: which credit checks count against youA hard inquiry comes from a credit application and can trim your score. A soft one never does. A table of the common checks, gray zones included.
- Credit checks for jobs: your consent, your copy and state limitsAn employer needs your written OK to pull your credit and must show you the report before acting on it. The federal steps, plus state and city limits.
Sources
- 15 U.S.C. 1681b, Permissible purposes of consumer reports, Cornell Law School, Legal Information Institute
- 15 U.S.C. 1681c-2: Block of information resulting from identity theft, Legal Information Institute, Cornell Law School
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