Is the Use of a Credit Check Always Legal?

Posted by Kristina Taylor
September 30, 2011

Is the Use of a Credit Check Always Legal?

More and more employers are choosing to use credit checks on employees as part of their pre-employment screening process. The thought is that looking at a person’s credit report is a pretty good indicator of whether that person is fiscally responsible and, therefore, possesses at least some of the traits that make up a good solid employee.

But it’s important for an employer to tread lightly and be careful in regards to credit checks, as some laws regarding the use of credit checks are different from state to state. For instance, some states, including Oregon and Washington, only allow an employer to use a credit check on an employee if it’s truly applicable to the job, such as an accounting position. If you want to use a credit check on someone applying for a position in, say, sales or marketing, then a credit check would be illegal. And according to the federal Fair Credit Reporting Act, you always have to ask an applicant’s permission to run a credit check.

Credit checks can be a great resource to use when deciding who is right for a particular job. But keep in mind that laws are being changed and fine-tuned regarding their use in the private sector. Some state lawmakers and in Congress are mulling over bills that would limit the usage of credit checks for employers. So keep up on the laws that apply to your business in your state, and make sure the employment screening service you hire is on top of things too.

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