A credit application is a form submitted to a prospective lender or lessor that provides credit information on a prospective borrower or lessee, respectively – and occasionally a guarantor – and used to assist in assessing the applicant’s creditworthiness and to obtain the applicant’s authority for the credit investigation and warranty as to the accuracy and completeness of the credit information provided. The credit application is central to the lease underwriting process. It typically authorizes the lessor to contact credit bureaus, banks and trade references for any relevant credit information on prospective lessees, to periodically update this information without further lessee authorization during the term of the lease, and to disclose such information to other parties.
Micro- and small-ticket (retail) leases generally qualify for “app-only” programs. An app-only program is a combined lease and credit application process in which an interested lessor reviews and grants credit based primarily on the information submitted on lease applications, augmented by inputs from bank and trade references and independent credit bureau reports. Rather than use of a credit application, the credit approval of larger transactions is generally based on the financial statements of the prospective lessee. Once the lessee’s credit has been approved, the lease is ready for documentation.
