If you are in a situation where you have collections on your credit report this may be a familiar situation: ever look at your credit report and notice that there are lots of inquiries on it from collection agencies? There shouldn’t be, or at least that’s what the 9th circuit court has ruled. In my opinion, many people get overly concerned with inquires on their credit report, but the fact is that excessive inquiries hurt you.

The 9th Circuit Court of Appeals recently decided Pintos v Pacific Creditors Association in January of 2007. In the facts of the case, the Plaintiff’s (Ms. Pintos) car was towed. She failed or refused to pay the towing company so they sold her car at auction. Apparently, the car did not fetch enough money to pay her towing bill. (I wonder what kind of car she owned that would not fetch the price of the towing bills?!)

The towing company turned the remaining debt (the difference between the auction price and the towing bill) over to Pacific Creditors Association (“PCA”). During collection activities, PCA pulled Ms. Pintos’ credit report. The 9th Circuit held that this was a mistake. Under the Fair and Accurate Credit Credit Transactions Act (“FACTA”) the newest revision of the Fair Credit Reporting Act, a collector may only pull a credit report in connection with a “credit transaction.” Ms Pintos did not ask or apply to the towing company for credit, an important legal distinction. Ms. Pintos lost her claim at the trial court but not in the 9th Court of Appeals.

This case could be important as a defense if a collection agency is suing you. It could get you some money as well should you decide to sue over the FCRA violation. In my opinion, the information that a collection agency has pulled your credit report is just another tool in dealing with them and possibly getting rid of the collection on your report all together, rather than a method of cleaning up inquires.

Who else has had excessive inquiries on their credit report from collection agencies? Leave a comment!

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