Consumers aren't the only ones who need to pull credit reports. Contractors also need to be able to be sure that their potential clients actually can pay for the project that they're dreaming about.

This contractor does not know how to qualify prospective clients. I can tell if you pay your bills or not in a telephone conversation. I can't imagine trying to build a relationship critical to a successful project based on such mistrust in the beginning.

I sure don't need your social security number to slap a lien on your property to assure payment in case I misjudged you. If you refused to sign a Notice of Commencement, we'd have no deal.

You don't have to give it to him, it's your choice. He may well choose not to work with you in turn, that's his choice. On a big job a credit check is not unreasonable, and for better or worse, technically legal or not, that requires a SSN. We provided a letter from the bank showing we had the cash on hand. If you really want to work with him and not give out the information I'm sure you could set up and escrow account for the project.

He has ways to protect himself from non-paying customers ... mechanics liens and the courts. He doesn't need your SS number.

I've never been asked that and have done numbers of projects ranging from small to pretty darn big.

That would make me nervous as heck too. I've had 2 houses built (along with various remodeling projects), and not once has any contractor ever asked for my SSN. I agree with the advice upthread - if you like him in other ways and want to work with him, I'd just tell him the truth. Asking him if he'd accept an escrow account instead is a great idea.

His asking to pull your credit bureaus is not an unreasonable request. There is nothing wrong with him wanting to ensure your credit worthiness prior to accepting the job, nor is there anything wrong with you declining.

Many of the things mentioned earlier are very little real protection against non payment for a contractor. Mechanics liens and the courts are more loss mitigation than payment, especially in a remodel situation. A judgement from the courts just legally affirms your right to collect. They don't hand you the money, you still have to get it from the homeowner, or go through the trouble of wage garnishment which is a giant hassle and will see a pittance paid to you every week for years to come. Mechanics liens are worse as they will only really be of value when and if the homeowner sells the house. Most remodels are financed with home equity and even after the remodels there is usually not enough equity to leave anything for the contractor to really attach to. So you can get your money in 15 years when they sell the house.

You cannot qualify someone over the phone by getting a feel for whether or not they pay their bills. Thinking that you can, shows a complete lack of understanding about what credit worthiness is. Credit worthiness is not about paying bills on time, in fact, you can have a terrible credit score without ever having made a late payment in your entire life. Statistics for bankruptcy show that a majority of filers had no significant late payment history in the 7 years prior to the incident that led to bankruptcy. Credit worthiness is about your ability to pay not your willingness to pay. You can be skating on the edge of over-extension and be well meaning, have every intention of never being late, and even think you are in good financial health, and when one financial incident sends you over the edge the whole thing crumbles like a house of cards. The Fair Isaac COrporation only looks at late payments as an indicator of how quickly you will abandon paying an obligation for other financial considerations. That is why they only look at 30 days late and above. They are not interested in whether or not you forgot to make your payment, they are interested in whether or not you will eat Ramen noodles in order to make your car payment. It is also why credit utilization is much more important than payment history. And why you can't judge credit worthiness over the phone.

No way. No how. NO!

When I interview a contractor, I'm in the drivers seat. I want to see certifications, licenses, insurance etc.

If you don't pay for work done, a contractor does NOT need your SS# up front to take action to collect.

By any chance, were you talking about or trying to get a line of credit to get the work done?

A social security number is not going to give him any additional collection rights. It will only give him reporting rights, which he has anyway but your social security number will make it easier for him. I assume he wants it to pull your credit. Which, again, he has every right to ask for unless you are offering payment in advance.

All payment upon receipt or payment upon completion is a line of credit. You are asking him to spend his time, money and resources for a promise of payment at completion or percentages of completion. Since he is spending his money and trusting you to pay him when complete, that pretty much is the definition of a line of credit.

We just got a new dentist and doctor and both required social security numbers before new patient enrollment. So it's okay for a dentist to secure himself for a filling, but unfair of a contractor to secure a $50,000.00 remodel? Typical professional bias against the trades. This is exactly why the kids aren't getting involved.

Joseph:
You could have declined to provide your SS# to the dentist/doctor. That's what I've done.

You can decline to give your dentist or doctor your SS#. But it's still used for insurance purposes, so you'd have to pay the fees upfront and submit your own insurance, rather than have the office submit for predetermination of benefits, and either participating fully with or accepting your insurance as partial payment for services. I work in several dental practices and I can guarantee you not one of them has run a credit check on a single patient. It's not a bias against the trades, it's because that's how your insurance company operates. Same with HIPAA. In my interpretation what this means is that you could object to our calling you by name in the waiting room but 9 bazillion administrators at your insurance company all have access to your records.

I went with a AAA rated contractor who has a design firm to do my 500 sq addition. They did NOT ask me for my SSN and no contractor I ever had ever did. I've had a roof done, deck, porch added, garage conversion, driveway repaved, grass put in, major electric overhaul, major plumbing, new heating and AC put in, many trees removes, windows done... not one of these contractors EVER asked me for my SSN. DO NOT give it.

hi Marina, do not give anyone least of all a contractor your social security number.

there isn't any reason for him to have it. I have never heard of this before. after all that I have read on this forum and others about bad contractors, geeze.

in my opinion and just my opinion, keep interviewing.

"We just got a new dentist and doctor and both required social security
numbers before new patient enrollment. So it's okay for a dentist to
secure himself for a filling, but unfair of a contractor to secure a
$50,000.00 remodel? Typical professional bias against the trades. This
is exactly why the kids aren't getting involved."

Health care and contractor work are completely different. As palimpsest expained, they ask your SSN so they can verify your info with the insurance company. Plenty of people on medicare and medicaid and the SSN is absolutely needed for those as well. Have you actually read the paperwork you sign at check in at the clinics? That is where you agree to allow them to bill your insurance and that you agree to pay the rest of the bill or the to pay bill in entirety if applicable.

Horrible idea for that contractor to ask for SSN, he wont get many jobs that way. Probably sells the SSNs to the black market on the side anyhow, there really isnt need for him to have it in the first place.

The dentist and the contractor are both asking for the social security number in order to get paid, the former indirectly, the latter directly.

Actually, your dentist and doctor no longer need your SSN to file claims with your insurance company. They may think they do, but they don't. I've refused to provide it on all new patient forms for years now and have only received push-back once. I simply told that office to call the insurer's 1-800 number on the back of my insurance card to ask about coverage terms and they would see that they didn't need my SSN to submit a claim or to get the claim approved and paid.

Although a little off topic. If you are using secrecy of your SSN as the primary protection against nefarious activity you are unprotected anyway. I could care less if I give my contractor my SSN as there is almost nothing he can do with it anyway. Since my credit is frozen and I don't allow hard pulls on my credit. I suggest everyone freeze their credit, you can find more info here.

90-95% of the contractors in business won't pull a credit report on a client as a matter of course regular business practice. 5% do on a regular basis above a certain amount. Those are the ones who have been majorly burned. And 30% will want to do some more intensive screening of a potential client that raises red flags. That May involve a background check or credit report. I would suspect that the disappearing OP may be in the second category, and has raised some potential red flags with the contractor. Rather than decline the job outright, he wants more information.

You may not believe it to be true, but there is a portion of the population that doesn't pay their bills. And they hire contract work done, and stiff the contractor. Dealing with people of questionable character goes both ways. Contractors and homeowners alike can be some pretty nasty characters. Too bad they don't find each other!

A lot of people pull credit reports. I have seen a lot of advice here that basically says that you should not allow a contractor to pull a credit report. I have to admit I am surprised. An application for a $300 credit card at Kohl's requires a credit pull, I don't understand why people are fine giving their social security number to the cashier at a department store who is making $8 an hour to get a line of credit for a few hundred dollars but will not give it to a contractor for a $20,000 + line of credit. I am not quite sure I see the logic.

I would suggest that you not allow him to pull your credit before you have accepted his bid. A hard pull will usually take 3 points off your credit score for a few months (I think it is 6 months). Personally, if I liked the guy and thought his bid was fair, his references are good, and I don't have questions about his integrity I would have no problem handing over my SSN for a credit pull.

LWO: Don't forget a contractor might also want a credit pull if other means of protection such as mechanic's liens don't offer any protection. This often happens in remodels where people are way overbuilding because they plan to live their forever. In these cases there is almost no protection from default for contractors.

Maybe it's not that out of line (with an explanation) but I can't help but wonder if the contractors participating in this discussion actually do it. If you do, would you really ask for it at the interview stage and not later in the process like Bry suggests?

Were my project large enough I may very ask my potential GC for HIS SS number......

Agree with millworkman!

no way do I give my SSN out anymore, even for medical (other than to the insurance company who has it).. There are very few people who need it. A large project, I would think the bank backing it would be enough.

I think a contractor who is that paranoid about not getting paid perhaps is a red flag on why people haven't wanted to pay him.

No, I would not give it out but would rather find someone else. It just sounds strange to me. I always leave that blank if it comes up on a form and no one has given me a hard time about it. I think there might be some laws around it for us but not sure.

.

"A lot of people pull credit reports. I have seen a lot of advice here that basically says that you should not allow a contractor to pull a credit report. I have to admit I am surprised. An application for a $300 credit card at Kohl's requires a credit pull, I don't understand why people are fine giving their social security number to the cashier at a department store who is making $8 an hour to get a line of credit for a few hundred dollars but will not give it to a contractor for a $20,000 + line of credit. I am not quite sure I see the logic."

The cashier at the department store is giving credit to you, its different if the contractor is just looking you up. If the contractor was a bank supplying credit to you then yes they need to do a credit check, otherwise I don't agree to giving SSN to contractors.

And btw, there is a lot that fraudsters can do with your SSN. I agree freezing your credit is a good idea if your not looking to get any loans or credit cards.

The contractor is giving you credit unless you pay in advance. There really is no difference between a department store letting you take home its merchandise and paying later, and a contractor doing work for you and letting you pay later. The only real difference is the department store mitigates the loss damages by charging interest, where the contractor has no such loss mitigation. If you decide not to make payment the contractor can't get his money back, he has to pay his suppliers for the materials he purchased, his employees for the time they worked, wear and tear on his tools and if you choose not to pay him those materials, that time, and that tool wear at best causes a significant cash flow problem for him and at worst is completely unrecoverable.

Freezing your credit is a good idea even if you are looking to get loans and credit cards. You just call up the credit company, give them your pin and allow temporary pulls. By the time you are 50 years old your social security number will be recorded in thousands of places. The idea of keeping something that is recorded in thousands of places secret is funny. Most identity theft doesn't come from people you give your social security number to, it is people who take it. I am not saying you should paint your social security number on your car, or give it to everyone, or give it to anyone for that matter. But at the same time, if your protection plan revolves around being careful who you share it with, well I once had a protection plan revolving around withdrawal and now I have kids.

No dentist ever has asked me for my SSN. It's on file with the insurance company who got it from the employer. Unless you are financing with the contractor (who does that????!!!! Nobody that's who) or the dentist (that does happen) you should not give out your SSN. Only financing places need it to run your credit to make sure they are giving a secure loan. (I worked in a bank and with credit reports daily so I do know a little about this).

To the person with the frozen credit push... no don't do that. Just monitor your credit. You can get free annual reports. only one place to get them (ONLY ONE). You can get them annually. Once each but you have to pay for your score I believe. Frozen credit causes a lot of hassles. It takes a while to clear it up and unfreeze if you want to buy a car or something. As for cashiers at dept stores. I'm gonna yell this: 1) so many stores get hacked for info... do not get a dept store card

2) discount on the dept store card is NOT worth messing up your credit - dept store cards can LOWER your credit score. It's unsecured debt in bankruptcy etc. Too much of this is super bad for credit. Too many inquiries are as well.

3) Dept store cards are HIGH interest rates. Just use a Visa. All you need is ONE credit card with a high balance and low interest rate. You can survive in the world quite nicely with that.

Back to contractor. Good point if you don't pay the contractor he can get a loss. It's up to the contractor to get money, like mine did, UP FRONT to start the project. I should be asking for HIS SSN!!!!!

Sue, having a dept card doesnt lower your score. How many you apply for and get hard credit checks in a short amount of time lowers your score. Dept cards with a zero or low balance actually increase your credit because you have more credit available overall. The higher your balance on your cards the more risky you are and the lower your credit score. If you have more credit available and keep a low or zero balance then your credit score increases. All you have to do is use cards the way you would a debit card for normal expenses (frugally) and pay them off each month.

Also, when stores get hacked, it isn't just their cards that get snatched, its any card that was used during that time period.

Sue you said - "so many stores get hacked for info... do not get a dept store card"

Department stores get hacked very publicly so while it seams fair to say that you must also realize that it just is not true. Your information is simply no longer safe. I mean the Target hack got so much publicity that it seemed like it was never going away. But in truth the theft of information from Anthem was 12% larger.

Which is OK considering the fact that Court Ventures (a subsidiary of Experian) was almost as large as every retail breach combined, almost three times larger than Target. No worries because Court Ventures has good company in the financial sector since the largest department store card hack ever was payment information that was stolen from the banks that did the processing, also the JP Morgan, and Heartland both still larger than any retail hack.

Credit monitoring works if you don't want to freeze your credit. It really is not a pain to buy a car with frozen credit. You log into a credit bureau, enter your account number, enter your pin, and your credit is unfrozen. When you unfreeze it you can set the time it will remain unfrozen, 3 days, 15 days, 30 days, or until you restart it. I did it on my phone in the car dealership office and they pulled my score three minutes later. When the service first came out it was a pain. Now it is really easy.

As I said before, if you are prepaying then don't give him any information, but if not then he is extending you credit and while you don't have to give him the information it is not an unreasonable request that he be provided with assurances.

"It's up to the contractor to get money, like mine did, UP FRONT to start the project."

In some areas, it's against contractor licensing law to get paid for work that has not been completed and there are limits to what they can be paid "up front." In Cali, contractors can only ask for a deposit of 10% or $1,000, whichever is less. That said, I woudln't expect a contractor to finance my project any more than I would expect to finance his business. A deposit up front, payment in full for materials as ordered/delivered, and regular progress payments as work is satisfactorily completed seems fair to both parties. Homeowners stand to suffer losses from contractors who aren't finacially solvent, too. If a contractor asks for a credit check from a client, he should be willing to provide one as well.

Vith or withdude?

having more open dept store cards w/low or zero balance does not help improve your score at all, how do you back up that theory?

The credit algorithm most used was designed by the Fair Isaac Credit Organization and is extremely complicated, enough that most blanket statements just don't work. So here is a brief explanation of a few ways that store credit cards effect your credit, in order of importance. (1) Payment history - a record of making payments on time is one of the best things you can do for your credit score. Since department store cards are easier to get they can help establish credit (2) Credit utilization - Keeping your credit utilization score low is incredibly important and can kill your credit just as fast as late payments and overdrawn cards. This means that you want the credit you use to be a low percentage of available credit. This is where closing zero balance or low balance cards can really kill you. (3) Age of accounts - Closing cards that have been established for 15 years can harm your credit, having an active account that was established a long time ago is a very good indicator of credit worthiness, and this is one trick that the algorithm uses to calculate beyond the 7 years of history. (4) Available credit - keeping a good credit utilization can be maintained by simply getting more and more credit. However, that can be bad at some point the algorithm starts subtracting points because of your ability to run up so much credit that you will never be able to pay it all back. Still it is better to have stores lower your available balance than close cards. (5) Number of cards really only has an effect on credit seeking activity. If you suddenly get a lot of new cards or regularly gain cards at a significant rate it can also hurt your score.

From Experian

Dear Experian,

Can closing a few of my department store credit card accounts affect my credit scores if I have established good credit and have high credit scores? My husband wants to eliminate our higher interest rate cards.

- LTB

Dear LTB,

Closing accounts can affect your credit scores. The extent of the impact depends on your credit history, most importantly your utilization.

Also your length of time living in your home, what types of credit you have (dept store is worse than mortgage but too much of anything even if better type of credit is bad). There's a lot that goes in there. Even including too many people pulling a report on you... that factors in!

Where you live and how long you have lived there are factors your bank may consider but they are not included in your FICO score. Many people are misinformed about secured vs unsecured credit. Secured credit helps establish your credit score much faster but is not always better. FICO has said many times that a balance between secured and unsecured is best, and low utilization on unsecured will benefit you far more than no unsecured.

There is a 3 point penalty per credit pull (sometimes lumped into activity) it effects you for about 6 - 9 months but if you have low amounts of credit each card can give you as much as 10 points so it is possible to get a 7 point jump by opening a new card.

I'd not give my SSN. A credit check can be done without it. Additionally, this person didn't say anything about the contractor saying they'd run a credit check. So, I'm not convinced that is the intent of the contractor who wants the SSN.

For medical and insurance companies/businesses, they are regulated and fined if they do not protect the information they collect. I don't know of any laws requiring contractors (licensed or otherwise) to protect any information they collect.

Additionally, in many if not most states, anyone running a background or credit check must have permission to run one. There are federal laws around credit checks: Fair Credit Reporting Act (FCRA), etc. Many states have their own versions of this act in addition to the federal version that are more restrictive.

So, again, there is no way I'd give my SSN to a contractor--not in my state.