Employment Credit Check

Credit checks related to employment matters are generally referred to as employment credit checks.

Can an employer conduct an employment credit check on me?

Generally, a potential employer is permitted to conduct an employment credit check to make a hiring decision about you. Subsequently, a potential employer might check your credit report as part of your employment background check.

After hiring you, your employer is generally permitted to conduct an employment credit check to make other decisions about you too, such as those regarding promotion, reassignment and retention.

An employer is generally permitted to do so, primarily because there is no Federal discrimination law that specifically prohibits employment discrimination on the basis of a bad credit report.

Employers obtain your credit report through consumer-reporting, credit-reporting or employment background-check agencies. A credit report typically includes some to all of the following information.

• Year of birth
• Current and previous addresses
• Marital status and spouse's name if applicable
• Current and former employers
• Social security number
• Bankruptcies, liens and judgments
• Child support obligations
• Loan and credit card accounts, and payment history
• Credit scores from the three credit-reporting bureaus
• Who has recently checked the credit report

Although it's generally legal for employers to conduct an employment credit check on you, the related provisions in the Federal Fair Credit Reporting Act (FCRA) and state credit-check laws at least somewhat regulate how employers obtain and use the information. For example, generally under the FCRA:

• An employer must first inform you that someone will be conducting a credit check on you and get your permission in writing (unless you work in the trucking industry, in which case your permission might not be required). Technically, you may refuse to allow it; but, in reality, you might not keep your job or land a new one if you do that.
• Before an employer may take an adverse action against you (e.g., eliminate you as a job candidate or fire you) based solely on a credit check, the employer must give you a "pre-adverse action disclosure" that consists of a copy of your credit report and a written summary of your rights under the Fair Credit Reporting Act.
• After an employer has taken adverse action, the employer must then provide you with an "adverse action notice". The employer must also give you the name, address, and phone number of the agency that provided your credit report, so that you may dispute inaccurate information.
• An employer must keep the results of a credit check confidential and can't store any information about it in your personnel file.

The employment provisions in the Federal Bankruptcy Act apply too: An employer can't discriminate against you, solely because an employment credit check revealed that you sought protection under the Act.

Even though there is no Federal discrimination law that specifically prohibits employment discrimination on the basis of a bad credit report, an employer still may not use a credit check as a guise to discriminate against you in any aspect of employment in violation of a specific discrimination law that does exist.

For example, an employer may not use bad credit reports as a guise to routinely discriminate against low-income job applicants on the basis of gender or race, in violation of Title VII of the Civil Rights Act.

Thanks to a 2005 amendment to the Fair Credit Reporting Act, Americans are entitled to see their credit reports for free once per year. If one of the three credit bureaus has issued an inaccurate or incomplete credit report about you, you have the right to dispute and attempt to correct it.

To do so, consult a credit repair attorney; alternately, do it yourself by following the credit repair guidelines from the Federal Trade Commission (FTC) or make it easier with a do-it-yourself credit repair kit. Either way, don't delay; correcting a credit report takes time and effort, and can be frustrating. In fact, complaints against credit-reporting bureaus are among the most common received by the FTC.

According to the National Association of State Public Interest Research Groups (PIRGs), 79 percent of the credit reports surveyed were inaccurate. Consider credit report monitoring to protect yourself from adverse employment decisions and identity theft as well.

You might have grounds for a lawsuit if you can prove damages from an inaccurate or incomplete credit report, such as loss of employment or a job opportunity as a direct result. Consult an attorney about that. Again, don't delay, as a statute of limitations applies.