Have a general question about employment law? Want to share a story? I welcome all comments and questions. I can't give legal advice here about specific situations but will be glad to discuss general issues and try to point you in the right direction. If you need legal advice, contact an employment lawyer in your state. Remember, anything you post here will be seen publicly, and I will comment publicly on it. It will not be confidential. Govern yourself accordingly. If you want to communicate with me confidentially as Donna Ballman, Florida lawyer rather than as Donna Ballman, blogger, my firm's website is here.

Friday, June 21, 2013

Your Rights Regarding Pre-employment Credit Checks

Nevada has just joined the ranks of 9 other states that have outlawed the use of credit history to discriminate against potential employees. However, they're still a minority. Still, there’s a clear trend in the states. According to the National Conference of State Legislators, “42 bills in 24 states and the District of Columbia have been introduced or are pending in the 2013 legislative session relating to the use the credit information in employment decisions. Out of the total 42 bills, 39 address restrictions on the use of credit information in employment decisions.”

In most states, pre-employment credit checks are legal. Employers argue that bad credit are an indication that the person may embezzle or be dishonest. I say nonsense. People with good credit embezzle all the time. People with bad credit may have just had a run of bad luck, a nasty divorce, uninsured medical bills, or some other unavoidable financial disaster. Being poor is not the same as being dishonest.

The recession brought this issue to a head. Suddenly 10% of the population was unemployed. People with stellar credit found themselves in trouble. While government tends not to pay attention to issues affecting the poor, when it hits the middle class, suddenly everyone cares.

There have been multiple attempts to address this situation in Congress. All have failed. In my opinion the current Congress won’t do anything until the problem starts to impact the upper class. We have a very anti-employee majority in office. The only way things will change is if voters speak up and tell their representatives to make employers butt out of their finances.

So, what do you do if you're in the unlucky majority of states that still allow this invasion of your privacy?

I suggest honesty. If you have bad credit, be ready to explain your situation. Tell the interviewer your plan to address the situation. While being “in over your head” may be considered an indicator of potential dishonesty, it doesn’t mean you’re going to become an embezzler. If you can demonstrate that you have a plan to get out from under the debt, the HR department might feel reassured.

What are your rights if an employer runs your credit history?

If your potential employer is going to run a credit check, then they must comply with the Fair Credit Reporting Act. This requirement covers anything the employer is getting from a consumer reporting agency that covers personal and credit characteristics, character, general reputation, or lifestyle, but not the HR department running your name on Google, checking out your Facebook page, or reading your blog.

If they are going to run a credit check, they have to give you a document solely for the purpose of telling you they intend to conduct a credit check. It was probably shoved in with a stack of papers they handed you with your application or pre-employment forms. They need your permission in writing.

They must also tell you if they’re about to deny a job, reassign, or terminate you because of what was disclosed in a credit report. They must give you written notice with a copy of your credit report and a document called "A Summary of Your Rights Under the Fair Credit Reporting Act.” This process does not apply to truckers.

Once the employer decides to use the report against you, they must then give another notice, this time telling you the name of the agency that did the credit report, saying the agency isn’t the one that made the adverse decision, and telling you how to dispute the information in the report with the agency. This notice can be verbal or in writing, unless you’re a trucker, in which case it must be written.

If an employer runs your credit history without permission, they’ve broken the law. If they don’t jump through all the hoops required under the Fair Credit Reporting Act, you have potential claims against them. In that case, contact an employment lawyer in your state to discuss your options.

The EEOC views the use of employment credit checks as potentially discriminatory against women and minorities. If you’ve been denied a job or had other adverse action taken against you by an employer based on bad credit, you might want to explore the possibility that you have a discrimination claim with an employee-side employment lawyer in your state..


  1. This comment has been removed by the author.

  2. Can't I just refuse to give my social security number until such time as I have to fill out a W4 form? They shouldn't need it otherwise, unless they want to run a background or credit check.

  3. I live in Mass. And I've been unemployed for 2 years because of this stupid fair credit reporting act. How can one fix their credit if they can't find a job because of it? I was also discriminated against at Workforce central because I suffered from bi-polarism . And despite the college scores I scored at Mass rehab, they wanted me to wash dishes! I live in discrimination central.

  4. I live in Massachusetts and because of the so-called "Fair" credit reporting act, I've been unemployed for 2 years. How can one fix their credit when one can't get a job because of it? Does that make me garbage? Isn't it fiscal discrimination?

  5. Donna, thanks for the great post, you`ve raised a painful topic for many employees. I believe that your credit history shows your level of responsibility, and if it wasn`t a bank robbery, I'm sure the employer will understand. At the same time, you need to understand the company, why it is interested in your credit past: https://www.trustedemployees.com/employment-screening/credit-history-check/ - this service checks the credit history of the employee and the information that is allowed by law, keeping candidate data confidential.


I appreciate your comments and general questions but this isn't the place to ask confidential legal questions. If you need an employee-side employment lawyer, try http://exchange.nela.org/findalawyer to locate one in your state.