Know Your Legal Rights is a bi-monthly column distributed by the State Bar of Wisconsin. It is sponsored by the State Bar of Wisconsin’s Lawyer Referral Service (LRS), which connects Wisconsin residents with lawyers throughout the state. To find an attorney in your area, visit wislaw.org.
By Attorney Nick Raef
Most people expect employers to review their resume and work history. What surprises many is that some employers also review applicants’ credit reports before making a hiring decision.
For some jobs, particularly those involving financial responsibilities or positions of trust, employers may request a credit report as part of the hiring process. While the credit report an employer receives does not contain your three-digit credit score, it does contain information about your payment history, outstanding debts, bankruptcies, liens, and certain public records like arrest records.
However, these records can contain inaccurate information, or give employers information that they may use discriminatorily. That’s why Congress passed the Fair Credit Reporting Act (“FCRA”) in 1970, which gives job applicants important protections.
You Have Rights Under the FCRA
First, an employer can’t obtain your credit report from a consumer reporting agency without your express written permission. If you’re asked to authorize a credit check, take a moment to read what you’re signing. Additionally, under the FCRA, you have the right:
- To be informed if someone uses your credit report to take any adverse action, such as termination, demotion, or refusal to hire;
- To know what is in your consumer report file;
- To have incorrect information changed;
- To prevent agencies from reporting outdated information;
- Negative information more than 7 years old may not be reported
- Bankruptcies more than 10 years old may not be reported
- Limit access to your credit reports to people with a valid need to see them.
If an employer is considering denying you a job because of information in your credit report, federal law requires additional steps before a final decision is made. The employer must notify you that your credit report influenced the decision, although it does not have to identify the specific information that led to the adverse action.
The notice must include a copy of your credit report, a summary of your rights under the FCRA, information about the consumer reporting agency that prepared the report, and notice of your right to dispute inaccurate information and request another free copy of your report within 60 days. If the consumer reporting agency cannot verify that the disputed information is accurate, it must remove it from your report.
Credit Reports Don’t Tell the Whole Story
A person’s credit history may reflect medical debt, identity theft, divorce, or an unexpected job loss. Financial setbacks don’t necessarily predict whether someone will be a dependable employee, and reliance on that data can serve to unfairly reinforce biases that lead to further financial setbacks. That’s one reason it’s important for applicants to understand the protections available if an employer relies on information contained in a credit report.
Don’t assume your credit report is error-free, and don’t wait until an employer is requesting it to check. Anyone can request a free report at AnnualCreditReport.com, and you should document every error from each agency and use that agency’s dispute process to contest it. You can do this before it ever becomes relevant in an application process.
For most job applicants, employment credit checks never become an issue. But if you’re asked to authorize one, don’t treat it as just another piece of hiring paperwork. A credit report can’t tell an employer whether you’ll be a good employee, but it may impact whether you get the opportunity to prove yourself at all. Understanding your rights before signing—and reviewing your credit report if it is used against you—can help ensure the hiring process is fair and accurate.
Nick Raef is an employment attorney with Hawks Quindel, S.C. in Madison, where he represents employees in a wide range of workplace matters, including discrimination, wrongful termination, and employment contracts.
Know Your Legal Rights is a bi-monthly column distributed by the State Bar of Wisconsin. It is sponsored by the State Bar of Wisconsin’s Lawyer Referral Service (LRS), which connects Wisconsin residents with attorneys throughout the state. To find an attorney in your area, visit wislaw.org.
This article provides general information about Wisconsin law and is not legal advice. For advice about your specific situation, consult a qualified attorney.
