Consent to a credit check (consumer reporting legislation)

A buyer applying for an acquisition loan, or a seller weighing a vendor take-back, may be asked to sign a credit authorization. This entry covers Ontario and British Columbia only; check the rules where you are.

Ontario

Section 8 of the Consumer Reporting Act bars an agency from knowingly furnishing information except in listed cases, including in accordance with the consumer’s written instructions, or in a consumer report to a person it has reason to believe intends to use it for a purpose the section lists, such as extending credit. Under section 10(2), a person must first give the consumer written notice before requesting or obtaining a consumer report containing personal information and, if the consumer asks, tell them the name and address of the agency supplying it. Section 10(3) sets a separate notice rule where a report containing credit information only may be referred to.

British Columbia

Under section 107 of the Business Practices and Consumer Protection Act, a person must not obtain a report from a reporting agency for the purposes in section 108(1)(a) without the individual’s consent. A person may obtain consent by any method that lets them produce evidence of it, including prominently displaying the information in an application.

What to ask

• What exactly the form authorizes and for what purpose
• Which agency will be asked for the report
• How your credit score may be affected by the request

See also how to get a loan to buy a business.