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Fair Credit Reporting Act

The Fair Credit Reporting Act is federal legislation that governs consumer credit reports and may affect how a credit professional gathers information to make a commercial credit decision. The Federal Trade Commission (FTC) states in its legal opinion that a vendor must obtain the consumer's consent prior to pulling a consumer credit report, even for a legitimate business purpose. The FTC opinion does not recognize a right of a creditor company to pull a consumer credit report in connection with a personal guarantee without first obtaining the consent of the consumer.

(Source: Scott Blakeley, a principal of Blakeley & Blakeley, LLP of Southern California, practices creditors' rights and bankruptcy law.)