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Employers Can Check Your Credit

Credit Report

A survey by the National Association of Professional Background Screeners found that 95% of employers conduct some sort of employment background screening on job candidates. Among those employers, 47% conduct credit or financial checks on at least some candidates. The HT Group doesn’t see it happen as often as that, but it CAN happen and it’s legal, too. It all depends on the job, how the credit check is conducted, and where you live.

Employers may do credit checks as part of pre-employment screening to look for things like bankruptcy and high levels of debt. These factors may be critical when hiring someone who will be handling money for the business.

“It might also be a security concern,” explains The HT Group Founder and CEO Mark Turpin. Jobs that give someone access to highly sensitive information like trade secrets, security data and confidential information may require credit checks while other jobs at the same company don’t. “These employers are attempting to disqualify the candidates that they believe may be more susceptible to theft or the temptation to steal information.”

According to the U.S. Equal Employment Opportunity Commission (EEOC), federal law doesn’t prevent employers from asking about financial information, but those employers need to be very careful about violating certain discrimination factors when doing so.

The Federal Trade Commission (FTC) offers additional guidance and rules through the Fair Credit Reporting Act (FCRA). Under those federal guidelines, employers who want to do a credit check as part of your pre-employment screening will need to:

  1. Get your written permission to do so.
  2. Inform you—in writing—that they might use the information they receive for decisions related to your employment. 
  3. Certify compliance with the company from which they’re getting the information that they followed the full requirements in these first two steps and that they will not discriminate or misuse the info.

Then, if the employer decides to reject your job application or rescind a job offer due to the information they receive, they must give you a copy of the report along with an official Summary of Your Rights Under the Fair Credit Reporting Act, which includes instructions on how to dispute the accuracy or completeness of the information.

Employers in Texas follow these federal rules, but employers in some other states and cities, including California, Colorado, and New York City, may not have as much freedom to conduct credit checks.

In any case, be sure to know your credit score and fix any problems you see pop up. The FTC offers these tips on how to do it. If you’re concerned about what an employer may find during pre-employment screening or how an employer has gone about conducting one, talk to your HT Group recruiter