Car dealer pulled my credit report 12 times; it's hurting my credit score

February 18, 2014 18:53 by Consumer Ed

Dear Consumer Ed: 

I am shopping for a new car. I specifically told the sales rep at the dealership to only check my credit one time. After running my credit report, the sales rep came back with a deal that was not good, i.e. the interest rate was too high.  I declined the offer and left. I’ve since discovered that the dealership checked my credit 12 times and may be continuing to do so.  This has already hurt my credit rating. I feel this is deliberate retaliation for declining their offer.  What can I do?

Consumer Ed says: 

It’s very important to monitor requests for your credit report.  These requests are recorded on your credit reporting file, and multiple creditor requests can negatively impact your credit score. You can easily check to see who has pulled your credit report by looking at the “Inquiries” section of your credit report.

Federal law strictly limits when and how a consumer’s credit report can be released to others.  Under the Fair Credit Reporting Act (FCRA), a consumer report can only be released to another person or entity for limited permissible purposes that are spelled out in the law.  For example, a credit reporting agency can furnish your credit report if you give written approval for the report to be released to a business; a creditor can access your credit report when you apply for credit; a collection agency can check it when attempting to collect a debt; insurance companies can pull your report to underwrite your insurance; and employers may access your report if they have your permission.   In order to access your credit report, a business must certify to the credit reporting agency that it is obtaining and using the credit report for a permissible purpose under the FCRA.  A person who knowingly accesses your credit report under false pretenses can be fined, imprisoned for up to two years, or both. 

According to the Federal Trade Commission, a car dealer does not have a permissible purpose to get your credit report if you’re simply asking for information about vehicles and prices, or if you just take a car out for a test drive – because at that point you haven’t initiated any transaction. 

In your case, it sounds like you gave the dealer verbal permission to pull your credit report.  So to the extent you allowed it to check your report so that the salesperson could make you an offer, you initiated a transaction with the dealership, and the dealer had a legitimate reason to pull the report – one time.  However, once you declined the dealer’s offer and left the dealership, the dealer no longer had a permissible purpose to check your report – it didn’t have your written approval to do so, and you were no longer considering purchasing a vehicle at that dealership.
   
If you become aware that your credit report has been obtained outside of the FCRA guidelines, you have several options. Specifically, you can do one or more of the following:

   •    Contact the business pulling your report, notify them that you do not believe they have a permissible purpose for accessing your report and request that they stop.

   •    Contact the three major credit reporting agencies to notify them that a business has been accessing your credit file without a permissible purpose.
          o    For Equifax, contact:  Equifax Information Services LLC, P.O. Box 105069 Atlanta, Georgia 30348.
          o    For TransUnion, you can request consumer support by visiting: www.transunion.com/personal-credit/customer-support/request-customer-support.page.
          o    For Experian: Experian requests that you first obtain a copy of your Experian credit report by visiting Experian online or by calling 1-888-397-3742. Once you have your Experian personal credit report, contact the number displayed on the report for assistance.

   •    File a complaint with the Federal Trade Commission by going to www.ftccomplaintassistant.gov; or

   •    Submit a complaint to the Consumer Financial Protection Bureau by visiting www.consumerfinance.gov/complaint/, clicking on “Credit reporting” and following the instructions provided.

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Can an employer refuse to hire you if you don't consent to a credit check?

December 19, 2013 17:21 by Consumer Ed

Dear Consumer Ed:

At a job interview I was asked if I would give my permission for the company to pull my credit report.  I know my credit is not very good, so I did not consent to this.  Now I’m concerned that refusing might cost me this job.  Can a company deny someone employment on this basis? 

Consumer Ed says: 

Yes, an employer can deny employment based either on your refusal to let it see your credit report, or on the contents of the credit report itself.  In 2012, a bill was introduced in Georgia to prevent employers from firing, refusing to hire, or otherwise discriminating against someone because of his or her credit report, but the bill didn’t pass.

This isn’t to say that an employer can look at your credit report without your permission—it can’t.  But an estimated 60% of employers perform credit checks.  Commonly, employers are looking for signs of irresponsibility, and some are worried about the potential for employee theft (although this is more common in fields like banking and finance).  Employers may also be concerned that an employee’s worries about his/her debt will have an impact on job performance.  This concern is unfortunate, since many recently laid-off people have fallen behind on their bill payments precisely because their income has decreased.  Many employers consider an applicant’s credit history because they are looking for a pattern showing that the applicant is able to pay, and actually does pay his or her debts, as a sign that the employee is a responsible person.

An employer must receive your written permission before it can obtain a copy of your credit report; this permission must be in its own document separate from any employment contract.   Giving this permission may give you some anxiety, especially if you know you have some negative credit history.  However, this might be a good time for you to go ahead and explain any negative information in your credit report.  You need to remember that if you don’t give your permission, the employer is likely to (and is allowed to) reject your application on that ground. One caveat:  If you’re applying to jobs over the internet, do not give your credit report out.  These requests are scams; any legitimate business can obtain credit reports from the major credit bureaus, and doesn’t need for you to provide that information through a website.

If you give permission for the employer to look at your credit report, and it rejects your job application based on your credit, federal law requires that employer to notify you of this reason, and show you the report.  You can then obtain a copy from the reporting agency for free within 60 days of such notice from the employer.  If you find errors in the report, see www.consumer.ftc.gov for information about how to address this problem.

If you suspect your credit history is hampering your job search, here are some tips to help improve it:

  • Make a budget. Live within or, if you can, below your means.  Incorporate late bill payments into your budget.
  • If you have been denied credit, you may request a free credit report.  Learn why you were denied credit.  If you find any errors, contact the reporting agency to dispute the information—they must correct errors.
  • Make a list of what and to whom you owe.  Contact creditors to discuss payment options and begin catching up with late payments.
  • Look for ways to combine bills.  This may include transferring a credit card balance to another credit card with a lower interest rate while simultaneously reducing the number of credit cards you have.
  • Look for ways to decrease your spending.
  • Look for ways to increase your income.
  • Do not use credit until you have paid off most, or all, of your debt. Consider cancelling or hiding your credit cards for this period of time.

 

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Debt Settlement

October 11, 2013 18:33 by Consumer Ed

Dear Consumer Ed:

I owe close to $30,000 in credit card debt. I contacted a company that said it could help me get out of debt.  The counselor I spoke to told me to stop making credit card payments for six months and that he would then contact my credit card company and offer to settle my account for $10,000.  Well, it’s now six months later, and the credit card company has refused to accept the debt settlement offer.  Because I didn’t pay anything for six months, I now have an even worse credit rating, not to mention my creditors have added late fees to my balance and have turned my account over to a collection agency.  What can I do?

Consumer Ed says: 

This company is engaged in an illegal practice known as “debt settlement.” While services known as “debt adjustment” may legally be provided to Georgia residents, these are strictly regulated by Georgia’s 2003 Debt Adjustment Act.  The reason such practices are stringently regulated is that people seeking these services are among the most vulnerable consumers:  those already in dire financial straits.

Before July 2003, debt adjustment, along with debt settlement, debt negotiation, and debt “counseling”, were all illegal in this State.  When our legislature began to allow some of those services to be provided to Georgia consumers, it enacted tightly written laws that established clear and rigid standards through which such businesses could ply their trade.

If a debt adjuster is charging for its services, it cannot provide them to Georgia consumers using any business model or fee structure other than the one contemplated under the Act.  Under this model, the debtor sends money directly to the debt adjustment company, which places the funds in a trust account and then disburses the money to the debtor’s creditors after taking a percentage of not more than 7.5 percent off the top as its fee. While up-front fees, which are fairly common, may be permitted (debt adjustment companies may charge you an up-front fee, monthly fee, or both), the combination of these fees may not exceed 7.5 percent of the amount paid monthly by the consumer to the debt adjustment company for distribution to his or her creditors.  In addition, the debt adjustment company must disburse all funds received from the debtor, less any fees, to creditors within 30 days of receiving them.

The company you contacted is using a model whereby the company tells consumers not to make payments to their creditors, then attempts to negotiate a lump-sum “settlement” with those creditors.  This practice is not permitted under the Debt Adjustment Act.

Companies that commit these types of violations can be subject to legal action on State and Federal levels. In fact, the Consumer Financial Protection Bureau recently took action against Meracord, LLC, a debt settlement payment processor that is alleged to have charged millions of dollars in illegal fees to over 11,000 consumers, nearly half of whose accounts were closed without ever being settled. The company must now pay $1.376 million in penalty fees and immediately cease all illegal activities.

If you believe the business you’re working with may have violated the Debt Adjustment Act, you can file a complaint with the Governor’s Office of Consumer Protection (www.consumer.ga.gov or 404-651-8600), and/or file a private a legal action of your own.  If the company is found to be in violation, it could be required to refund all of the fees you paid and, in a private action, you may request an additional $5,000 as restitution.

Because your debt has been turned over to a third-party debt collector, you are entitled to certain protections under the Federal Debt Collection Practices Act (FDCPA).  Among other things, the FDCPA prohibits a debt collector from contacting you at unreasonable times and places, using abusive tactics to collect the debt, or falsely representing themselves.  For more information about your rights under the FDCPA, visit: http://consumer.georgia.gov/consumer-topics/debt-collectors.

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