Permissible Purposes to Run a Credit Report

The Fair Credit Reporting Act regulates the use of credit reports in an effort to protect a consumer's privacy. All users of a credit report must have a permissible purpose under the Fair Credit Reporting Act in order to obtain a credit report.

While there are a number of permissible purposes listed under the act, generally speaking, there are three which are applicable. The first permissible purpose is whenever the consumer gives permission in writing. The second is whenever the extension of credit is as a result of an application for credit from a consumer. The third and more complicated permissible purpose is when there is a legitimate business need in connection with a business transaction that is initiated by the consumer.

Here is a list of the most common permissible purposes:

• In response to a court order-the consumer reporting agency may furnish reports if so direct by court order.
• The consumer’s written instructions- the consumer reporting agency may furnished when the consumer gives the reporting agency written instructions to do so.
• Credit-consumers reporting agencies may furnish information in connection with a credit transaction involving the consumer and involving the extension of credit,review or collection of an account.
• Employment-consumer reporting agencies may furnish information for employment purposes defined as evaluating a consumer for employment, promotion, reassignment or retention as an employee.
• Business Purposes-consumer reporting agencies may furnish reports when there is a legitimate need for the information in connection with a business transaction initiated by the consumer and the person requesting the information.
• Insurance- consumer reporting agencies may furnish reports in connection with the underwriting of insurance.