FCRA Guidlines

Note: The source of the following information is the Consumer Financial Protection Bureau in Washington, D.C.

If you’re a job seeker and a prospective employer tells you that they do background and reference checks on all their candidates for employment, there are some basics you need to know about the Fair Credit Reporting Act, which applies to employers and all consumer reporting agencies.

First, before the prospective employer can have anything checked, you will be asked to sign a comprehensive waiver that allows the prospective employer or its agents to carry out the background and reference checks. In effect, what you’re doing is acknowledging that you’re aware that a background and reference check will be done and that it’s okay with you if they have the checks done—that you know they’re going to check and that you’re giving the company or its agents express permission to do the checks. Naturally, you don’t have to sign the waiver; but, then again, the prospective employer doesn’t have to hire you, either.

The following information comes from Consumer Financial Protection Bureau in a document titled “A Summary of Your Rights Under the Fair Credit Reporting Act.” If you sign the waiver and a background check and reference check is done, “you must be told if information in your file has been used against you.” If an outside agency did the checks, you must be told their name, address, phone number.

Furthermore, “you have a right to know what is in your file.” In other words, you can request to see all the information the prospective employer has collected about you. Sometimes there’s a fee to look at your file, but in many cases there won’t be a charge to see what’s in your file.

Next, “you have a right to ask for your credit score.” Unless you’re applying to a job that, for example, involves handling the company’s money, a credit check probably won’t be part of the background check.

Some employers, however, take the view that if a candidate can’t handle his own financial affairs, he probably won’t be able to handle the requirements of the job. So, if your credit score is low, by inference, there’s a presumption that your job performance probably won’t be good. Personally, I think that logic is pretty sketchy. I would never base a hiring decision on a low credit score—that is, unless the job involved some aspect of money management.