Employers and Your Credit Score

Employers want to gather as much information about applicants as possible in order to decide whether the person will be the right fit for the job. This information traditionally includes contacting references, verifying academic degrees and professional licensures, checking past employment history and conducting criminal background checks. Employers also may require screening for illegal drug use, personality tests and physical fitness exams. As if these measures were not invasive enough into a job applicant's personal life, employers also may request a copy of an applicant's credit history.

The Fair Credit Reporting Act (FCRA) is a federal law that provides protections to consumers and enumerates the purposes for which their credit scores can be used and the procedures for requesting this information. Under the Act, "employment purposes" is a legitimate reason to request credit information on an individual. "Employment purposes" includes:

  • Evaluating an applicant for employment
  • Evaluating an employee for promotion or reassignment
  • Evaluating an employee for retention

In order for an employer to request an individual's credit report for one of these permissible uses, the employer first must submit a written request to the individual asking to review their credit information and then receive written consent from the individual to make the actual request.

Employers may not request credit information without following this procedure. Likewise, credit reporting agencies are not permitted to release credit information to employers who have not received permission from the individual to do so.

Employers may take adverse action against a job applicant or an employee based on the information in his or her credit report. If the employer decides to take adverse action, the employer is required to:

  • Notify the employee or job applicant of the action
  • Provide the contact information for the credit reporting agency that supplied the credit report
  • Provide a notice of the individual's rights under the FCRA to dispute the information in the credit report
  • Inform the individual that the credit reporting agency did not make the decision to take adverse action against the individual and that the credit reporting agency will not be able to explain why the action was taken against the individual

The individual has a right to request and receive a free copy of the credit report from the same credit reporting agency the employer used. The request should be made within 60 days of receiving notice of the adverse employment action.

To learn more about the FCRA and your rights, contact an experienced employment lawyer in your area.

Meeting with Your Employment Law Attorney

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Meeting with Your Employment Law Attorney

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