A person’s credit rating is extremely valuable to consumers and businesses we do business with. Anytime we apply for a loan, buy a car, rent an apartment, or anyone who is extending credit to us usually looks at the individual’s credit report to assess whether they are a good risk or not. Consumers with higher credit ratings, as indicated on their credit report, are less likely to default on loans or not pay their debt. There is no guarantee; however, businesses and the financial industry can usually predict whether you will be a good risk or a high risk by assessing your credit history.
In this post, we will look more closely at credit report authorizations, the forms, and why they are important. Consumers must give consent before a credit rating agency can release their credit rating report to a 3rd party.
What Is a Credit Report Authorization Form?
The credit report authorization form is used to obtain consent from a consumer for a third party to request their credit report from a credit rating agency and allow them to assess it concerning their business and whether they should extend credit to the consumer. The request must follow the Fair Credit Reporting Act (FCRA) regulations.
Credit report agreement forms must be written clearly and avoid ambiguous or vague language. In addition, consumers should not expect to pay a fee for the preparation of the credit report.
There are two main types of credit report authorization forms:
- Provide permission to order your consumer credit report from anyone who compiles credit reports.
- The second type only allows specific information about the consumer from any company that compiles credit details
For example, credit card companies use this information to help them decide if they will extend credit to you and how much credit should be extended. They may request reports from all of the main credit reporting agencies. Credit reports are used by landlords, insurance agents, employer’s collection agencies, government agencies, lenders, utility companies, and anyone who needs to assess the risk of doing business with you. A credit report authorization form must be signed by the consumer before these entities can request a credit report and assess your creditworthiness.
Essential Elements of a Credit Report Authorization Form
A credit report authorization form must have basic information to properly identify the consumer and avoid mix-ups with other consumers. The information should include the following details:
- Your full name as it appears with the credit reporting agencies
- SIN – Social Security Number
- Consumer’s date of birth
- Consumers drivers license
- Last seven years of residential history
- Who is to receive the information
- Full or partial disclosure of information
- Signature of the consumer and date the form was signed
Note:
a) A credit report authorization is considered valid for one year; however, you can include an expiration date if less than one year is desired.
b) Ensure that the information provided is accurate and aligned with details retained by credit reporting agencies. E.g., the address on your license should correspond with the address on file.
c) The date recorded on the form beside your signature is considered the effective date of the authorization for the credit report.
How to Get the Consent to Run a Credit Report?
Many consumers would prefer that their credit rating and information remain private. However, most understand that if they want to be approved for something, i.e., a loan, a rental agreement, etc., they will be asked to sign a credit report authorization form to allow the 3rd party to verify their credit rating.
It is required by the Fair Credit Reporting Act that consumers are asked to provide their agreement to allow their credit to be searched.
If you need to do a credit check on someone, take a few minutes to explain why you need to do the credit check and the information you will need to enable the credit check. It should be emphasized that this is sensitive information and that it will be safeguarded, and a copy can be provided to them if requested.
Complete the authorization form and request the consumer to sign their name, print their name, and date the letter. In today’s electronic world, electronically signed signatures are acceptable if the appropriate steps are taken. Many businesses use Hellosign, Docusign, or Adobe Sign.
How to fill out a Credit Report Authorization Form?
Once you have a template prepared, filling in a credit report authorization form is straightforward. Fill in the name of the person granting the authorization and the name of the company being granted the right to access credit information. Next, the applicant’s name, social security number, and date of birth must be provided. Your current address, including state and zip code, must be provided. In addition, addresses for the past seven years must also be provided.
Finally, provide the applicant’s driver’s license number and the state in which the license was issued. The address on the driver’s license should correspond with the current address provided by the applicant. The last step requires the applicant’s signature and the date the form is signed.
Template for Credit Authorization Form
By my signature below, I [applicant’s name] authorize [name of the entity to receive permission] to obtain a credit report on myself.
By my signature below. I hereby authorize [all or specific] corporations, credit agencies, former employers, law enforcement, educational institutions, city, state, county, federal courts, and agencies, including military services, to release all information and details about me, including any driving and criminal history. This information is valid in original or copy format.
Applicants Name: [ applicants name]
Social Security Number: [SSN], Date of Birth: [date of birth]
Address information for the past seven years.
Current Street Address; [current street address], City [city]
State: [state], Start Date: [date], End Date: [date]
Prior Street Address; [current street address], City [city]
State: [state], Start Date: [date], End Date: [date]
Prior Street Address; [current street address], City [city]
State: [state], Start Date: [date], End Date: [date]
Prior Street Address; [current street address], City [city]
State: [state], Start Date: [date], End Date: [date]
Driver’s License #: [ license number], State: [state of driver’s license]
Applicants Signature: [signature], Date: [date]
Note: a photocopy of the applicant’s valid driver’s license should be included.
FAQs
The following are several of the frequently asked questions about completing a credit report authorization form.
The FCRA was put in place to protect the rights of consumers and encourage accuracy and fairness, and privacy of consumer information contained in the files of consumer reporting agencies.
No, anyone can request basic credit report information without obtaining the consent of the consumer; however, this action contravenes laws and guidelines put in place to protect the consumer. Inquiries to a credit agency can impact a consumer’s credit score. The information is considered private.
Yes, anyone can request a credit report on another person; however, the consumer’s privacy rights are being violated and are in contravention of the FCRA (Fair Credit Reporting Act).
Only companies that the consumer has legally authorized can check and request credit reports on the consumer.
Consumers can sue individuals and companies who have requested credit checks without authorization, knowledge, or consent in civil court. These credit checks may involve fraudulent activities and should be reported to the credit bureau.
Key Points
Landlords, lenders, and many other agencies routinely request credit checks on clients they intend to enter into an agreement with to protect themselves from fraudulent transactions. However, the FCRA (Fair Credit Reporting Act) protects the consumer to ensure that not just anyone can request a credit check. The consumer has the right to authorize a credit check report and must complete and sign a credit report authorization form authorizing the company to make the request.
Consumers can also request a copy of the report to verify its accuracy and confirm the details contained in the report.
The social insurance number and the driver’s license number are usually required. The consumer should ensure that the driver’s license is valid and reflects the current address reported on the authorization form. An authorization form filled in incorrectly can cause your credit check to be delayed.
