Credit Policy for businesses and how to extend credit and manage credit risk

Many business owners I talk to seem surprised that they can sign up with a credit bureau and have access to potential customers credit reports when offering employment or credit.

According to the Office of the Attorney General of the United States, “Any business, individual, or government agency may request a credit report for its legitimate business needs involving a transaction with a consumer.”

Valid reasons to check credit are:

1. Reviewing the report to extend credit
2. Reviewing an account in order to collect a debt
3. Employment
4. Insurance underwriting
5. Security Clearance

People who can obtain credit reports in order to make decisions on credit worthiness or a business-related decision include:

1. A company you hire to help you if you think you have been the victim of Identity Theft.
2. Any government agency.
3. Any state or local child support enforcement agency.
4. Anyone who has written authorization (this could be a signed credit application)
5. Current or potential landlords
6. Employers and potential employers
7. Insurance companies
8. Banks, credit card companies, any potential lender.