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Employment Decisions Based on Credit

Did you lose a job opportunity because of an undisclosed or inaccurate credit pull?


Employers frequently obtain a copy of your consumer report in order to run a background check before hiring an employee or for some other employment purpose. These consumer reports will frequently contain employment history, criminal history, etc.  It is lawful for employers to do this but certain steps must be followed under the Fair Credit Reporting Act (FCRA) to make an employment decision based on credit. There are concerns about invasion of privacy of you and your family and corporations must follow those steps if they want to investigate you.

  • The business must disclose that the company will/may obtain a copy of a consumer report about the employee. If it’s a background check, the employer must get written consent.
  • The disclosure must be in writing, be clear and conspicuous, and in a document that consists solely of that disclosure.
  • The consumer rights disclosure must be given before the employer obtains the copy of the background report.
  • If the business is going to make an adverse decision based upon that consumer report – usually failure to hire, suspension, demotion, pay-cut, or termination – the company must disclose to you that they are considering that option BEFORE the company makes that adverse decision.
  • The company cannot have decided to terminate, demote, suspend, cut the pay, or fail to hire the employee before giving the employee an opportunity to respond. The business must give a copy of that consumer report and summary of the employee’s rights under FCRA
  • The worker gets a reasonable amount of time to investigate and follow-up on the information.
  • The business must then provide written notice that the action was in fact taken based upon information in that report.

Credit reporters and background check services are frequently over-inclusive about data and information in reports. An individual with a similar name or a similar social security number might have their criminal charges included in your record. A family member’s credit issues might be included with yours. These types of mistakes are not acceptable. Consumer reporters must use reasonable procedures to assure maximum possible accuracy of your personal, private information.

Businesses cannot make an employment decision based on credit checks upon  without giving you a fair chance to clear up the misunderstanding.

Employers also cannot run a consumer report or a background check without making it very clear to you in advance that they are going to do so.

Our firm handles cases where our clients have an employment decision based on credit checks or due to an inaccurate criminal record. All consultations on Fair Credit Reporting Act cases are free and we always take FCRA cases on a contingency basis, meaning no attorney fees are owed unless we recover compensation for you.

You can also subscribe to our mailing list to learn about the rights you have under consumer protection law against large corporations.


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