Are Credit Reports Legal With Job Applications?
Using your credit score as a condition of hire is not only legal, it's popular. Industries from accounting to car sales use this information to determine your financial stability and ability to manage money. An applicant has several rights under the Fair Credit Reporting Act, which every employer must adhere to when seeking consumer reporting information like a credit score.
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Why A Business Uses Your Credit Report
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A business who expects a prospective employee to handle large sums of money or valuable property while on the job such as baking, finance and real estate use the applicant's credit score as a condition of hire. It is believed a person's credit score paints an accurate picture of the likelihood that they would steal or otherwise conduct illegal behavior in the name of a larger payday. If an applicant cannot manage his own finances, the business doesn't want him touching business finances.
Fair Credit Reporting Act
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According to the Federal Trade Commission, any employer who uses consumer reports, such as a credit score for hiring employees, promotions and termination is required to inform prospective employees and existing employees in writing of the intent to seek consumer report information. The applicant or existing employee must be notified in writing immediately if the information contained in his credit report can result in a negative employment decision.
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Your Rights
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You must give your permission for an employer to seek your credit history. An employer is required to notify you in writing before your credit score is obtained if the information contained in your credit report could lead to your not being hired. If you are not hired, you are required to receive a notice of adverse decision from the employer stating why he has not hired you. You also have the right to contest any information contained in your credit report that you feel may have falsely led to your lack of hire.
Using Obtained Credit Score Information
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It is illegal for an employer to distribute credit information obtained as a condition of hiring or other employment decision. A employer who compromises employee identity in this way is actually committing identity theft, a crime which is punished by heavy fines and lengthy prison sentences. An employer who uses credit score information without an applicant or employee's consent leaves himself open to be sued for damages in civil court.
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