Essential Takeaways of the FCRA

Consumer credit reports are an important component of background screening for potential and current employees, but that information must be used in compliance with FCRA guidelines. Because credit report information can have such a strong impact on someone's finances and employment, many protections are provided. In addition, employers and employees alike should be aware that, according to a recent government report, as many as 23% of consumers have found errors in their credit reports, so care must be taken in using this data for hiring decisions. Key FCRA protections and responsibilities include:

Employer Responsibilities

• Employers must obtain consent to perform credit background checks.
• Employers must inform current and potential employees if any adverse actions are made as the result of their credit screening results.
• Employers may only consider negative report data from within the previous seven years (ten years for bankruptcies).

Some states limit if and how a credit report can be used by employers. It is important to know if the state in which you are conducting the check prohibits employers from using credit reports in making employment decisions. There may be exceptions for requiring a potential or existing employee to give permission to a credit report. Check with the state departments of labor to be sure you are in compliance with the most current legislation. 

Employee/Candidate Protections & Rights

At Employers Reference Source, Inc., our extensive background screening services are fully
compliant with the FCRA and other regulations governing them, simplifying your screening needs. Contact us today to take advantage of our expertise with a wide range of screening solutions.