In an ever-growing concern over privacy, in addition to the fear of financial damages to the regular consumer, there is no doubt that we always worry about a potential abuse of our privacy. An example of such abuse is when your credit report lands in the wrong hands. There is a protection provided under the Fair Credit Reporting Act. So long as the review of the credit information was in connection with a credit transaction involving the consumer or for other legitimate business purposes (including a review to determine whether the debtor still meets the terms of the account), there is no violation of the Fair Credit Reporting Act.
Generally, there are two types of credit report inquiries: (1) Hard inquiries defined as reports made in response to a request by a credit card company or other lender in connection with an application for credit that a consumer made to the requesting credit card company or lender; and (2) A soft inquiry that is an inquiry not made in connection with any application for credit.
Understanding the difference between these two types of credit report inquiries is critical for you to put them into the context of unauthorized credit report activity, and in detecting possible signs of identity theft. When done by an unauthorized creditor, such inquiry causes privacy issues or affects your credit score– and the ability to obtain credit– in a negative way, and it is often the driving force for litigation under the Fair Credit Reporting Act.
The Fair Credit Reporting Act and state credit reporting laws restrict who can access your credit report, and how it can be used. It is not always easy to detect unauthorized users, but one way to protect yourself is to order your credit report and look for unfamiliar names or businesses in the list of inquiries. If someone has requested your report illegally, you may be able to sue for a violation of the Fair Credit Reporting Act.
In a world where credit ratings have become important in determining not only whether or not you will be able to obtain credit, but also in determining the interest rate that will be offered to you, it is important for you to remain vigilant in protecting your credit rating at all times.