Knowing and understanding what’s in your credit file should be a part of your job search process. Whether you’re unemployed or looking to improve your current employment status, your credit report may have a direct impact on you getting a job. It’s common practice for many employers to use a credit report as part of their background check before making a hiring decision. In some states, federal law allows potential and current employers to view your credit report and use it for hiring and promoting purposes.
Illinois is one of eleven states that made employment based on credit history or credit reports illegal. Under the Employee Credit Privacy Act (ECPA) signed into law in 2011, an employer can’t hire, fire, demote, or set pay compensation based on an individual’s credit history or credit report. The ECPA makes it illegal to ask questions about your credit. However, under the ECPA banks, financial institutions, insurance companies, surety businesses, debt collectors, and law enforcement are exempt from using credit to determine your employment because they demonstrate an occupational requirement. Employer’s that don’t fall into the exempt category are allowed to use credit as a “bona fide occupational requirement” if; 1) state or federal law requires bonding for the position; 2) job duties include access to cash or marketable assets of $2,500 or more; 3) job duties will have a signature responsibility of $100 or more; 4) the position is managerial and involves setting direction or control over the business; 5) the position will have access to confidential information, financial information, or trade secrets.
If an exempt employer conducts an employment credit check when hiring, they must follow the legal rules outlined in the Fair Credit Reporting Act (FCRA). The FCRA requires employers to get consent before getting a report. The consent must be separate from the job application. If an employer decides not to hire you because of the employment report, they must give you notice they have decided not to hire you and let you know the name and address of the credit reporting agency and information on your right to dispute the report.
Credit reports were not created to be used as an employment screening tool. They were created to help lenders evaluate potential risk for would be borrowers. Credit checks for employment often become barriers to job opportunities and tools to further racial discrimination. Credit checks for employment are not supposed to show employers your credit score. They will show personal information that includes your name, social security number, previous addresses, collection records that include medical bills and tax liens, bankruptcy records, the amount of debt you have including car payments and mortgage debt. Your credit report will not tell any life altering events such as the death of a spouse, or divorce. Yet, these events may have a negative impact on your credit and which might affect you getting a job.
Get a copy of your credit report before you start or after you start your employment search. You’re allowed one free credit report each year, from each reporting credit company. For additional assistance with understanding credit and employment contact the staff at METEC Resource Center, who have certified financial counselors and employment counselors.