Know Your Rights

If you’re concerned about your credit history affecting your job prospects, here’s what you should know.

An employer needs your permission to run a credit check. The Fair Credit Reporting Act (FRCA) requires your written permission any time an employer hires a third party to conduct a background check. That includes running a credit report. Of course, you likely won’t get the job or promotion if you don’t agree. But failing to get your okay is an FCRA violation.

While other black marks can be used against you, technically a bankruptcy cannot. Under Title 11 of the U.S. Code, employers are prohibited from discriminating against someone who has filed for bankruptcy. Since most people have trouble paying their bills before they file, this is often a moot point -- the employer can point to that history as the reason for the adverse action. If an employer makes the mistake of citing your bankruptcy as the reason you were fired, not hired or denied a promotion, though, you might want to consult a labor attorney about a lawsuit.

An employer is supposed to tell you if credit information is used against you.

If an employer uses credit information to deny an applicant a job, fire a current employee, rescind a job offer or cancel a promotion, federal law requires the employer to do two things:

1) Before the adverse action is actually taken, the employer is supposed to provide the worker with a copy of the report and an explanation of the workers FCRA rights.

2) After the action is taken, the worker must be told which company provided the credit information, be given the company’s contact information and told he or she has a right to dispute the report’s accuracy.

Rather than go through all this, of course, many employers simply find a less complicated excuse to give you.

Your ability to dispute the information may be of limited use, as well. If your employer’s decision was based on erroneous data in your credit report, for example, it could take you months to get the problem corrected -- by which time someone else will have been hired for the position you wanted.