In the fine print of many loan applications, lease agreements, and other financial documents there is often a much-overlooked “credit check” clause. This clause stipulates that the lender, landlord or financial institution be allowed to check the other party’s credit history. Many individuals do not fully understand what a credit check is or why one is required in such agreements.

Credit checks are simply confirmations of a person’s credit payment history. There are many times where knowing a person’s credit history is important, such as when you are considering renting an apartment to someone, or issuing a business loan. Wouldn’t you like to know how likely they were to pay you back?

With all the issues surrounding identity theft more and more people are concerned with releasing any personnel information when filling out applications, etc. Creditors and insurers need to perform credit checks to make sure they will be repaid. These companies are governed by the rules outlined in the Fair Credit Reporting Act.

You must give your employer signed permission to obtain a copy of your credit history. They are limited in how this information can be used or shared with others. Should your credit report be obtained without your express written permission, they may be subject to legal action.

Many people are unaware that they can easily look into their own credit history, essentially carrying out credit checks on themselves. Under the Fair Credit Reporting Act, all Americans are entitled to request their own credit histories, free of charge, once a year from each of three different credit reporting companies, for a total of three free reports a year.

It’s imperative to obtain a copy of your credit history, because you need to know what information is being used by lenders to evaluate your financial status. One of the most crucial things to know is your numerical credit report scores. This is a summation of everything in your past having to do with credit. Most lenders will want to see a copy of your credit report with score before they can assess how wise it would be to give you a loan. Get the upper hand and find out what your score is before they ask; this will give you the upper hand when applying for a loan.

After you learn what is in your credit history, you will understand why banks and other financial groups feel it is important to review your file before deciding to deal with you. Learn who can see your financial records so that you can safeguard your credit record from people and companies who want to use the information to harm you.

Credit checks are part of almost every contract we now enter into. If you are renting an apartment, leasing a storage unit, buying or leasing a vehicle or the big one purchasing a house your scores will be checked. Your credit report scores determine the interest rate that you will pay to your creditors and if your score is low you maybe denied credit. Knowing your scores will allow you to negotiate better terms. Everyone has the right to request a copy of their credit report with score. This will also be an opportunity for you to make sure that know one else has been using your personal information.

- Daniel Lesser