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Question & Answer
Question: Do we need to have a written application in order to pull a credit report on an applicant?
Answer: Under federal law, you must have a legitimate business purpose in order to request a credit report. The credit application is a recognized business purpose for obtaining a credit report. Under the federal Fair Credit Reporting Act, you need the application, but the Act does not require that the request be in writing. Thus, for purposes of the federal law, you may pull a credit report when you have taken a phone application.
State law may impose a more stringent requirement. Some states only permit accessing a credit bureau report with the applicant's signed permission. Generally, that permission may be contained on the application form, or it may be on a separate form or statement that the applicant signs. Some of the state laws on this have interesting tricks. It is therefore important to know your state's law on credit reporting in addition to the federal law. Check you state law before you set your policy.
Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 1, 1/97
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