Question:  May we automatically obtain a credit check on parties to a business loan?

 

Answer:  Actually, the Fair Credit Reporting Act authorizes credit reports for consumer credit.  The FTC staff wrote an opinion indicating that no report was authorized for an individual guarantor.  However, the banking regulators complained, and a new opinion was issued stating: "...the FCRA would permit a lender to obtain a consumer report in connection with a business credit transaction where the consumer in question is or will be personally liable on the loan, such as in the case of an individual proprietor, co-signer, or guarantor."