About Credit Checks From Employers

When it comes to hiring someone for a job, employers may look for information beyond your resume and interview. Some employers may run credit checks as part of their hiring process for certain positions. When it comes to credit checks from employers, there are certain rules that govern what an employer can and can't do.

Function

An employer may use a credit report to gain information about your character, your personal and credit history, your lifestyle and your reputation. An employer's right to access this information is governed by the Fair Credit Reporting Act (FCRA), which tries to balance an employer's access to relevant information with an employee's right to privacy.

Identification

In order to request a credit report for a person, employers must get written authorization to perform the check. If an employer is conducting a second credit check for an employee, the employee must be notified in writing that a second check is taking place. If an employer rejects a potential employee partly or entirely because of information contained in the employee's credit report, the employer must notify the employee of the fact in writing and include the contact information for the agency that provided the report.

Benefits

When an employer is faced with a large pool of applicants, a credit check can help narrow the field. A credit check can also help an employer to determine an employee's trustworthiness and responsibility level. Credit reports can also an employee in making decisions about an employee's potential salary and responsibilities within the company.

Considerations

Keep in mind that the FCRA dictates minimum requirements for performing employee credit checks, but some states have stricter requirements. If you're performing checks on potential or current employees, check with your state's department of labor to ensure that you're following its particular laws.

Warning

If an employer fails to comply with the rules outlined in the FCRA guidelines, the employee whose rights were violated has the right to sue for damages, including punitive damages if he can prove the violation was intentional, in federal court.