Federal law allows potential and current employers to view a modified version of your credit report for employment purposes such as hiring and promoting.
This employment credit report includes much of the information about your loans and credit cards that is listed in your credit report. To protect your financial security and meet Equal Employment Opportunity laws, Experian employment credit reports omit your account numbers, year of birth and references to your spouse.
Traditionally, the biggest users of credit reports for employment purposes are companies in the defense, chemical, pharmaceutical and financial services industries because of the sensitive positions many of their employees hold. Increasingly, other industries use the reports to serve as a general indicator of an applicant’s financial honesty and personal integrity.
The report, however, does not tell a potential employer whether to hire or promote an applicant. An employment credit report typically is used in addition to application information, references or skills testing to help employers make the best, most objective hiring decision.
Under the Fair Credit Reporting Act, a credit report may be obtained only:
- When authorized by the consumer in writing.
- When there is a legitimate business need in connection with a business transaction initiated by a consumer.
- When a consumer applies for credit.
- For the review or collection of a consumer’s account.
- To review a consumer’s account to determine whether the consumer still meets the terms of the account.
- For making “prescreened” offers of credit.
- For portfolio analysis of existing credit obligations.
- For employment purposes, including hiring and promotion decisions, when the consumer has given written permission.
- For underwriting insurance when a consumer has applied.
- For use by state and local officials in connection with determination of child support payments.
- To determine a consumer’s eligibility for a government license or other benefit when the law requires consideration of the consumer’s financial responsibility.
- When ordered by a court or federal grand jury subpoena.
Recognizing the sensitive nature of credit reports, legislators enacted several consumer protections:
- Federal law prohibits anyone from accessing a credit report without first obtaining written permission from the consumer
- If the credit report plays any part in a decision that negatively impacts the consumer, federal law requires the company to give the consumer a copy of the report along with a written description of the consumer’s rights
In addition to state and federal requirements, Experian® instituted several policies to protect consumer privacy and ensure accuracy:
- Experian strongly recommends that employers do not deny employment solely on the basis of a credit report
- If the credit report contains information that concerns a potential employer, Experian encourages the employer to give the applicant an opportunity to clarify the issue
When an employer obtains a copy of a credit report for employment purposes, that access is not shown on future credit reports except when an applicant obtains his or her own report directly from Experian. This protects consumer privacy because other employers or credit grantors will not be informed about job-related activities. In addition, inquiries for employment purposes do not affect creditworthiness or credit risk scores because they are not shown to lenders. (Information about employer access is located in the “Requests for your credit history” section of the consumer credit report. It remains on the file for two years.)