DisputeSuite

Credit Reports and Employment

Section 604 of the Fair Credit Reporting Act allows employers to pull credit reports for
the purposes of pre-employment and continued employment screening. The practice,
while widely criticized by consumer advocates, is still very popular with some 60 percent
of employers either pulling credit reports for all of their applicants or at least some of
them, this according to a survey by the Society for Human Resource Management.

One very common myth is that employers use your credit scores as part of theirscreening processes. This is false and has been confirmed as false by all of the credit
reporting agencies and their trade association, the Consumer Data Industry Association.
But, credit reports certainly can cost you a job especially if you’re applying for a position
where you’ll have access to sensitive information such as financial data or propriety
company data.

California recently passed a law that will limit the use of credit reports to only certain
jobs. The law, which is called AB22, could become the model used by the roughly 20
other states that are kicking around the idea of outlawing or limiting the practice. The
California law still allows for credit report reviews by employers but not for any and
everyone.

For example, if you apply for a job at a grocery store to be a check out clerk, it’s
no longer legal to pull your credit report. However, if you apply for a job to be the
manager of the grocery store and you’ll have constant access to large sums of cash and
information about how the store prices and places their products, a credit report review
will be fair game.

Another thing to keep in mind is that none of the credit reporting laws prevent current
employees from having their credit reports pulled. It’s not just those who are applying to
become employed who have to be concerned about their credit reports. If you are being
reassigned or considered for employment to another position within the same company,
your credit reports can be pulled as well.

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