Do you do it? What kind of information do you need about the individual to obtain their report and do you have to let them know?
Has anybody made an important decision based on a credit check?
Jon Blakemore
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>>How do you do it?
I would suggest contacting your attorney first. State law varies and you can easily violate the law if you are not careful.
That said... you can join a credit reporting agency such a Equifax, Transunion, Experian, etc to do it. You can also subscribe to any number of secondary providers of credit information.
It is just a matter of having the customer complete a credit app (typically, the service you use will provide) and entering the info into the computer. Be aware... there are strict requirements for who can see the information and it is your responsibility to protect that information once it is received (in a locked filing cabinet... not in the job folder where a "normal" employee can see it).
>>>What kind of information ..
Just what is on the credit app for whatever service you use.. unless you want specialized information for your specific purpose that goes beyond the typical credit report.
>>>do you have to let them know?
OH YES SIR... do NOT pull a credit report on ANYONE without first informing them of your intent! Note, you don't necessarily have to let them know each time you pull it... the initial release will be good for a specified time... or the time allowed by law.. whichever is less.
>>>Has anybody made an important decision based on a credit check
Sure. Employment (in a situation where the person is responsible for handling money.. or a position where it is relevant in another way), extension of credit (although I avoid this like the plague), and in hiring subs... contractors... suppliers.
Remember... if you deny services, credit, etc for a reason that is uncovered in a credit report.. it is (pretty sure of "is... might be "may be") required that you inform the customer of the reason and the source of the information.
It is only a TOOL however in the big picture. Example... I wouldn't hire someone just because they had a good credit report. I would use it only as a TOOL in the decision making process.
To analogize.. imagine the credit report as the "circular saw" in the tools needed to build a house. The circular saw is important... but try to hammer a nail with it and it falls a bit short of expectations!
Edited 8/4/2004 5:04 pm ET by Rich from Columbus
Kinda sorta...
There was this one outfit doing a developement and building houses to sell on their own lots. my payment for the roof always seemed to drag out until just before the next one was ready for me to start. "Hey P we've gpt another one for you ready on lot # _____, and BTW, stop by the office on you way up to the job. we've got a check sitting here for you from the last one.
These roofs were in the neighborhood of five grand each which was a sizeable sum back then, and I started hearing rumours about other guys who were getting stiffed; the mechanic, the fuel company, the landscaper,...
Now it was illegal for anybody to tell me the guys credit history, but things didn't smell too good. So I asked my banker ( I had done work on his house and had a decent relationship with him) how I could find out the financial status and if I could get a credit report on him.
Dick said, "Tell you what, take this credit app out to him to be filled out and signed. Tell him that your banker is requiring it since we are extending you a line of credit and our money is being tied up out there."
So the next time I stopped at the constructiuon office to pick up a check on the way to start my next, I chatted the guy up and told him that I needed the credit app filled out and signed since I was extending him credit on every job.
he laughed and threw it back at me and said he wasn't going to divulge a damn thing about his finances to me.
So I said that I didn't plan to do any more roofing for him and left. He was still yelling when the door closed.
end of story is that the next roofer was charging him more by about 15% but he only did three more roofs before they went belly up and he didn't get paid for the last one.
Then, a year later, the new owner of that house hired me to repair a leak in the chimney. The shakes had been laid with no flashing of any kind! Had to reddo the whole area.
don't do credit. That is the banker's job. If you need to do that to get the work, hook up with Countryside or Greentree or one of those finance outfits. They handle the money so that you get paid, and you get a finders fee or brokers fee for hooking the customer to them, plus the money is at the ready when the work is done.
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Years ago my dad got a summer job for my older brother on a major construction site for which my dad was supplying concrete. Several weeks into the job, my brother's paycheck bounced. My dad immediately filed a lien against the building, and was the only supplier to be paid before the contractor went bust. The contractor was hoping that by paying off my dad that it would be kept quiet and he would still get credit from the other suppliers. Turns out the guy had a history of stiffing suppliers, and was hired from out of the area because he had the cheapest bid. The local GC who finished the project enjoyed the irony all the way to the bank. And my dad made good on my brother's check.
Doing a credit check on someone w/o getting their permission can result in a major fine. As mentioned by others, each check knocks some points off a person's rating, which can affect what type and amount of credit that person can obtain. You didn't save what the prospect was, an employee or a customer. For an employee, a criminal background check might be better. In Maryland in the mid 90's they cost $18 and were done by the state po-leece. I'm sure they can be done anywhere as well. Call a large childcare operation and ask where they get them done for their employees.
Right on the background check for employees - I ate regularly at a local restaurant in CO before getting hitched up so I knew the owner and all the employees there. Except for the cooks. They move a lot. She used a service to get new ones. A background check was standard operating procedure to getting hired there, but I don't know if it is necessary to get permission from the applicant first or not on that.
This now has me wondering whether cooks or 'painters' seem to have the worst backgrounds and history. Apologies to all the legit Chefs and real Painting tradesmen out there
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Hey, it's the white collar guys with the worst records. I'd never hire a mergers and acquisitions specialist or a chief financial officer without a thorough investigation... make sure they're crooked enough for the job.
You absolutely need someone's permission to run that check. Here it's the sheriff's department that does it. For some reason they ran me when I became a volunteer firefighter. Maybe it's because we're public employees going into people's houses.
Absolutely check with an attorney as the other poster said.
Another point is that you can't arbitrarily check credit for some customers and not others or some potential hires and not others without opening yourself up for a discrimination claim. If you check credit only because someone "looks shady", or is a single mom, or whatever, you create an opportunity for someone to raise a flag. So you need a system, such as all credit over $xx, or all accounts without cosigners, or whatever. If you have a policy that you go with over and over again you are in a defensible position. Again, check with an attorney.
in the good ole days i had a car lot,we were set up with trans union and in about 3 mins i could pull your report cost was abot a 1.00.well after starving in that profession i became a landlord [it's pretty hard to figure out which image is lower, i just need to be a attorney and i'll have all bases covered lol] we do run checks now on the rentals through a credit check agency for 10.00. on ours you need to have name ,address, ss#, driver lic #, birth date. we have them give us this info on a sheet of paper with permission to run a bureau. so they know your doing it. if you don't tell them and they see their bureau latter it will show you as a inquiry. now if you was doing some 2-5k job for me and asked for my bureau i'd just ask back in a smart_ss way you show me yours ,i'll show you mine,because every time persons credit is checked in a short time your score goes down a little bit. it assumes you are not able to get credit at a,b, or c store for some reason. so nobody is going to hit mine unless their loaning me some $$$$.ii'm not saying it isn't a good piece of info to have, but use it wisely. larry