How Often Can a Collection Agency Pull My Credit Report?

When a company or individual pulls your credit report, a record of the inquiry appears on your credit profile. Some entities and individuals, such as an employer or landlord, must obtain your permission before pulling your credit report. However, other entities, such as credit card companies or debt collection agencies, can legally access your report without prior consent.

Applicable Federal Law

Under the Fair Credit Reporting Act, companies and individuals must have a permissible purpose for viewing your credit report. That is, you must initiate a credit-based business transaction with the company, or it must have a current credit-based account in your name. This law also applies to collection agencies. A collection agency that owns a debt in your name has permissible purpose to pull your credit report. There are no limits on how often companies with permissible purpose can pull your credit report.

Effects of Credit Inquiries

All credit inquires are not equal in how they are reflected on your credit report. Some inquiries can damage your credit score, while others do not. Soft inquiries, which result from background checks, pre-approved credit offers and current credit or financial accounts in your name have no effect on your credit report. Hard pulls, which result from applying for a loan or new credit accounts, can lower your credit score up to five points, according to LendingTree. Collection agencies usually make hard pulls on your credit report, which is perfectly legal under the Fair Credit Reporting Act. Even though a single hard pull lowers your credit score a few points, multiple hard pulls can be detrimental to your credit score.

Solution

If a debt collection agency makes an erroneous hard inquiry on your credit, you have the right to file a complaint under the Federal Credit Reporting Act. The collection agency must either provide proof that you own the debt or remove the hard inquiry from your credit report. If the debt collection agency fails to remove erroneous inquiries, you also have the right to sue the collection agency within one year of the violation in federal or state court. According to the U.S. Federal Trade Commission, the judge can order the collection agency to pay up to $1,000 in damages, in addition to your attorney fees and court costs, if you win your case.

Considerations

Although hard inquiries from debt collection agencys damage your credit score, they lower your score for only a short period of time. Unlike other types of debt collection information, which stays on your credit history for a minimum of seven years, hard pulls appear on your credit history for a maximum of two years. Additionally, the scoring model most lenders use factors hard inquires into your actual credit score during the first year only, according to Bankrate.com.