Employer Credit Checks: Know Your Rights
You know that bad credit can damage your ability to buy a home or get a loan, but for many Americans, a less-than-perfect credit report also looms when it comes to securing a new job.
According to federal law, potential and current employers are allowed to check a candidate or employee’s credit report. That being said, there are limitations and as a consumer and applicant there are basic rights and protections you should be familiar with before you begin the job search and interviewing process.
Under the Fair Credit Reporting Act, employers and potential employers are required to provide specified disclosures and documents before, during and after checking a candidate or employee’s credit report. The following requirements are monitored and enforced by the Federal Trade Commission.
You have the right to receive a free copy of your credit report
The Fair Credit Reporting Act lets citizens obtain on free copy of their credit report every 12 months. You can obtain a copy through one of three national credit reporting agencies: Experian, Equifax and TransUnion. The FTC recommends checking this report prior to interviewing, or even better, before you actually apply for a position.
You have the right to authorize or deny employer credit checks
Employers and potential employers are required by law to get your permission before running a credit report. In most states, you must give this permission in writing, and will be provided with a form to check off and sign along with your application materials.
You have the right to receive pre-adverse action documents
If there is a chance that the employer will use the information in the report as reason to either not hire or fire you, that employer must first give you a copy of the credit report they obtain as well as a copy of the document, A Summary Of Your Rights Under the Fair Reporting Act.
You have the right to be notified of adverse action procedures
If an employer chooses not to hire you because of information contained within in a credit report, that employer must explicitly inform you of this decision either in writing, electronically or orally. The notice itself must include contact information for the credit reporting agency that provided the credit report and a notice of your right to dispute information contained within the report. The employer must also notify you that you can obtain an additional free report from the same agency within 60 days.
You have the right to report violations
If the employer or potential employer fails to complete any of the actions listed above, from obtaining your written authorization to providing an adverse action notice, you have the right to report that violation to the Federal Trade Commission. The FTC’s contact information is available here.
For a basic overview of why and how employers check credit, as well as tips on how to protect yourself while on the job hunt, see “Can Bad Credit Hurt Your Chances of Getting a Job?”