Background on Credit Records and Credit Bureaus
If you have credit, one or more national credit reporting agencies collects information about credit accounts, how much you owe, whether you pay bills on time, and more. Credit bureaus are profit-making companies that gather and sell information about a person's credit history. The Big Three are: - Equifax
- Trans Union
- Experian
In addition to these three, other smaller credit bureaus may also be collecting and storing information about you. What Is the Fair Credit Reporting Act?The Fair Credit Reporting Act (FCRA) regulates credit bureau activities. However, since it was written in the 1970s, the Act predates computerization and its affects on the credit reporting industry. Thus, consumers remain inadequately protected. The Act requires credit agencies to share their data only with those who have a legitimate business reason for the information (which includes employers). Can Employers Check Your Credit?
Currently, many employers do routine credit checks on employees and job applicants. There is little that you can do to prevent such actions. Employers may use your credit history in deciding whether to hire you. Under the FCRA, employers have broad access to your credit report, which can be used in an evaluation of employment, promotion, or retention. Credit bureaus track your bill-paying habits and all the companies that have asked to see your credit rating (e.g., when applying for credit, insurance, a home, or a new job). Employers may use this information to find out whether an employee is seeking another job with other companies. What Are My Rights?The FCRA provides some rights to the employee to know how and whether a current or potential employer is using his credit information. An employer must get written permission from the employee before looking at his credit report. This grant of permission cannot be given in a job application form or other standard form. The employee must sign separately to signal his approval. If you are rejected from a job based on your credit report, the employer must give you a copy of the report, and written instruction on how you can challenge the report's accuracy. What Can I Do if I Am Rejected Because of My Credit Report?There are certain things you can do if you are rejected based on your credit report: - If an employer uses your credit information against you, it must admit to doing so and give you the name, address, and telephone number of the credit agency that provided the report
- You are entitled to a free copy of the agency's report
- You have the right to correct any errors in reports compiled about you
- You should check and correct your file every few years (especially if job hunting or applying for credit)
- You should contact your state consumer protection agency or attorney general if you suspect misuse of your credit report
Do I Need a Lawyer Experienced with Credit Reports?A lawyer may be helpful in guiding you through your rights. As noted above, your rights are limited in this context, and an attorney may be able to help you fully appreciate what rights you do have. |
