Can An Employer Fail To Hire Based On Credit Score?

It’s not common for employers to conduct background checks for prospective employee credit scores.  However, some checks go deep to determine one’s credits score.

Depending on the position, an employer may be concerned with whether you are declared bankruptcy or have any outstanding debts.

The law is clear on how an employer may use any information obtained during employment background checks.

If you are looking for a job, you may be wondering whether your prospective employer will be concerned with your credit report.

 Can Information On My Credit Report Affect My Job Search?

A credit report shows how one has managed their credit over time. Many agencies collect such data and produce reports. Such reports are then sold to creditors or anyone with a legitimate need. Meaning, your credit report may either be for or against you.

An employer with a legitimate business need has a right to review your credit score during a background check.  The notice of your credit report must include:

  • The source of your report.
  • Have a defined reason why they need your credit report.

A credit report has a significant impact on decisions made by others.  If your credit has issues and you’re looking for work, be assured that your prospective employer will conduct a background check which will reveal your criminal history, credit score, medical records, among others. Fortunately, your prospective employer has to comply with the federal Fair Credit Reporting Act (FCRA).

The agency requires that an employer get an employee or a job applicant’s consent before using their credit report. They must notify you in writing.

The best thing here is that the consent will help you have a chance to review whether your credit report contains errors. If you don’t want your credit report reviewed, no one should push you into it. Similarly, your employer is not obligated to move on with the hiring process or any other hiring action.

Again, the affected party must be given a final notice once the employer makes a decision.

In California, an employer cannot use your credit history when making hiring decisions. This is unless there is an exception. Some of these include:

  • Your prospective employer is a financial institution such as a bank.
  • The law requires your credit report.
  • Your credit report finding has a direct connection with the type of job you are applying for. In this case, your employer has to get the consent of why they need to use the information contained in your credit report.

If your employer relies on the information provided on your credit report and takes an adverse action, they have to communicate why. Such action must be communicated officially.  If no valid reason, you may file a claim. Such claims require you to look for an experienced employment lawyer who can handle your case.

 When An Employer Relies On A Faulty Credit Report

If your employer relied on an inaccurate credit report, you need to dispute such information. However, you need to learn how to dispute incomplete or inaccurate information in your credit reports.

If you’re looking for a job, it’s advisable to consider checking your credit report first. You will avoid many issues.

Nevertheless, everyone has a right to dispute a credit report if they believe it contains inaccurate information. One way to know about such mistakes would be to get a copy of your credit report for a reporting agency.

The agency then reviews your dispute and can take it off from your credit report within three business days.  If you complain of the dispute and no action is taken, you can talk to a lawyer to help you enforce your legal rights.

   Your Employer Has An Obligation To Comply With The Law

Most employers are concerned with one’s credit report to verify their identity or prevent theft. Such reports show whether you may be responsible or not.

But if you believe your employer ignored the law and took adverse action based on your credit report finding after an employment background check In California, you need to look for legal help.

Your employer is under obligation to comply with federal laws. They cannot take an adverse action such as to discriminate based on your credit report.

Note that in case of any criminal issue, your employer is not required to give you notice. They can use an agency to collect such information either due to criminal activity or misconduct. But such report should be collected with no charges.

If your employer is to take an action based on your misconduct, such action to be taken need not be disclosed.

Again, if an adverse action is taken based on your misconduct or wrongdoing, a copy of the report must be provided.

For more details on how your credit report can be used in an employment context, speak to an experienced employment lawyer to get advice.


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