An employment credit check is a restricted product in a growing number of states, and it is not part of a standard background check unless you ask for it. What it returns is also narrower than most employers expect. This page covers what is actually on an employment credit report, where you may run one, and the narrow set of roles where it tells you something worth knowing.
It is not the report a lender sees
An employment credit report is a modified version of a consumer credit report. It typically shows accounts, payment history, balances, public record items and inquiries, but it does not include a credit score, and the account numbers are usually masked. Nor does it include date of birth in the way a lender's version might. Employers routinely ask what score a candidate got, and the answer is that there is no score on it, because employment reports are not scored.
Where you may not run one
A number of states restrict employment credit checks to defined categories of position, typically managerial roles with financial authority, positions with access to money or trade secrets, law enforcement, and roles where a credit check is required by law. California, Illinois, Colorado, Connecticut, Hawaii, Maryland, Nevada, Oregon, Vermont and Washington all have restrictions of some form, and several cities have their own. Running a credit check on a warehouse hire in a restricting state is a straightforward violation, and the exceptions are narrower than employers assume.
The EEOC dimension
Even where a credit check is lawful, using credit history in hiring has been the subject of disparate impact scrutiny, because credit records correlate with factors that track protected characteristics. Medical debt and the aftermath of unemployment both show up on credit reports and both have obvious innocent explanations. If you use credit history at all, be specific about which roles justify it and what you are actually looking for, and be prepared to explain how it relates to the job.
The FCRA process is the same
An employment credit report is a consumer report, so it needs the standalone disclosure and written authorisation before it is ordered, and if you decline somebody because of it, the pre-adverse action notice with a copy of the report and the Summary of Your Rights, a reasonable wait, and the final notice all apply. Several state statutes add their own disclosure requirements on top, including telling the applicant specifically that a credit check will be run and why.
Questions people ask about employment credit check
Does a background check include a credit check?
Not by default. It is a separate product you have to ask for, and in several states you may only run one for defined categories of role.
Does an employment credit report show a credit score?
No. Employment credit reports are not scored. They show accounts, payment history, balances and public record items, usually with account numbers masked.
Which states restrict employment credit checks?
California, Illinois, Colorado, Connecticut, Hawaii, Maryland, Nevada, Oregon, Vermont and Washington all restrict them to defined role categories, and several cities have their own rules. The exceptions are narrower than employers assume.
When is a credit check justified?
Roles with genuine financial authority, access to money or assets, or where a check is required by law. Be specific about what you are looking for and how it relates to the job, because credit history has been the subject of disparate impact scrutiny.