Can Collection Agencies Pull My Credit Reports?

Collections--qmYou may be surprised to find out that credit reports can be used to find debtors who have “skipped out” and have left no forwarding address.  These individuals can be past due on their bills and cannot pay, so they change addresses and phone numbers, so they cannot be located. They try to avoid paying by being invisible. Enter the credit report…

Thanks to the Fair Credit Reporting Act (FCRA) collection agencies and collection departments are permitted to review credit reports.  The collectors review credit reports to obtain information to try to find the person that “skipped”.   The collectors look for recent updates on the credit report such as a new address, phone number, recent payments, or recent transactions. If there is new activity, the collector may contacts the creditor to obtain more information, such as updated contact information. Or, if there’s a new address on the credit report then the collector will likely send payment demands to that address.

The credit report also indicates the amount owed to other creditors and how well they are paying their other accounts.  If the individual is late on all or most of their debts, they may not have the money to make their payments. On the flip side, if they are making payments, they may have money to pay the collector. And, if they have available credit on a credit card they definitely have the ability to make a payment on their collection.

If there is no recent information on the credit report, the collector can place passive tracking on the credit report at each of the three credit reporting agencies: Equifax, Experian and TransUnion.  The collection department or collection agency is notified by the credit bureaus when there is an update on the credit report.  The update can be anything on the credit report, such as personal information, credit information, inquiries, or public records.  The consumer has “reappeared.”

Personal information updates can be to an address or phone number, which indicates that the person has moved and the credit bureau provides the new contact information.  A change to credit information such as a payment or transaction indicates that debtor may have funds to pay bills or are using credit.  A new credit inquiry indicates they are applying for credit. Public record information usually means that they haven’t been able to pay their bills and have a tax lien or judgment and are not in a good position to pay their obligations.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, founder of www.creditexpertwitness.com and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  You can follow John on Twitter here.

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