How can credit checks be used? 07-08-2003
Is it legal to refuse a managerial position based on the applicant's credit check?
Ann Kiernan replies:
Yes - if they follow the rules set up by the federal Fair Credit Reporting Act. Some employers only want an applicant's or employee's credit payment records; others want driving records and criminal histories. For sensitive positions, employers sometimes order investigative consumer reports--reports that include interviews with an applicant's or employee's friends, neighbors, and associates. All of these types of reports are "consumer reports", governed by the Fair Credit Reporting Act.
To use consumer reports, including credit checks, employers must:
- tell applicants and employees that consumer reports will be considered,
- obtain written permission from applicants and employees before requesting the reports,
- give applicants and employees written summaries of their rights under the law, including the right to dispute inaccurate information in consumer reports, and
- tell applicants and employees if the consumer reports were the reasons for rejection.
The Federal Trade Commission's fact sheet on what employers need to know about using consumer reports is
here.
In addition, although the Fair Credit Reporting Act does not require it, general privacy principles state that employers should limit their requests for credit histories to applicants whose jobs require handling money or similar positions where credit history is clearly job related.
| Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first. |
