Credit Report Trends and Limits

interview in office discussing credit report

Are all the new background and credit check employment law changes confusing you? The newest change comes to the limits being placed on the credit reports and how they are used.

Policies regarding using credit checks as part of pre-employment background checks have been getting looked at. Indeed, the Equal Employment Opportunity Commission (EEOC) regulations that have come into effect, have affected the Fair Credit Reporting Act (FCRA) and changes have been made to the credit check regulations. Further, these changes are what we are going to review.

States Limiting Credit Checks

As of 2016, according to Demos there were 11 states that had passed laws limiting credit checks in employment.

  • California
  • Colorado
  • Connecticut
  • Delaware
  • Hawaii
  • Illinois
  • Maryland
  • Nevada
  • Oregon
  • Vermont
  • Washington

Besides the above states, the following cities have implemented restrictions to credit checks, New York City and Chicago.

Limited as a Part of the Hiring Process

A key restriction that seems to be common in most of these laws is the roles that may have a credit check run as part of the hiring process. Some additional limitations and restrictions you need to know of before running a credit check are:

  • What industry will they be working in?
  • Will they have access to personal information?
  • Will that have access to a large amount of funds?
  • Do they work with banking or trade secrets?
  • Are they required to have Federal Security Clearance?
  • Are they in law enforcement?
  • Does their role require them to have a high level of the public’s trust?
  • Does the candidate make over $75,000 annually?

Learn More About Credit Report Trends and Limits

One thing to always remember is that if you are running a credit check to be sure you are providing the potential employee a copy of the Fair Credit Reporting Act and follow the correct pre-adverse and adverse action procedures for your state and local government.

Further, if you have more questions or want to set up a program for your company than contact us today.

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