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Can Your Credit Score Affect Your Employment?

The short answer is "Yes." But there are some protections. The Fair Credit Reporting Act ("FCRA") requires employers to jump through some hoops if they intend to take adverse employment action against an individual based on credit information. If an employer fails to follow the law, the individual may be entitled to damages and attorney's fees. An employer may rely on credit reports. An employer may obtain a credit report for the purposes of making employment decisions. 15 U.S.C. § 1681b(a)(3)(B). Such employment decisions include hiring, promotion, reassignment or retention. 15 U.S.C. § 1681a(h).

An employer must obtain written authorization first. However, an employer may only obtain a credit report for employment purposes after having made disclosure in writing to the individual before the report is procured and only if the individual consents in writing. 15 U.S.C. § 1681b(b)(2)(A).An employer must make disclosure. If the employer takes an adverse action based on a credit report against an individual such as, for example, failing to hire or terminate the individual, it must:
  • notify the individual of the adverse action;
  • provide written or electronic notice of the credit score upon which the adverse action was based;
  • provide the individual with the name, address and telephone number of the  consumer reporting agency that furnished the report;
  • provide the individual of his right to obtain a free copy of the report and to dispute the accuracy or completeness of any information in a report.
15 U.S.C. § 1681m(a).An individual may recover damages. If an employer negligently violates the FCRA, an aggrieved individual may recover actual damages and attorney's fees. 5 U.S.C. § 1681o. In the case of a willful violation of the FCRA, an aggrieved individual may also recover punitive damages. 15 U.S.C. § 1681n. GSF
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