Credit Applications

Many lessors require or should require their lessees to fill out a credit application. At its most basic, the credit application provides an introduction of the potential lessee to the potential lessor ' both as to its legal organization as well as its financial ability to fulfill its obligations under a lease. Although credit applications assist lessors in making these credit decisions, the lessor should make sure that it avoids the pitfalls of the Equal Credit Opportunity Act ('ECOA') and that the financial information it obtains through the credit application is stored appropriately to avoid liability under various state laws regulating the storage of private financial information. This article discusses the components of a good credit application, the requirements of the ECOA, and the best practices for storing private financial information.