Using Credit History in the Hiring Process


(Disclaimer: The information contained herein is not legal advice, and should not be construed as such. You should discuss the use of consumer reports with your organization’s legal counsel to ensure regulatory compliance.)


Historically, United States employers have commonly utilized credit history as a measure of financial responsibility and overall trustworthiness for employment applicants. However, in recent years, numerous states and municipalities have enacted legislation restricting the use of credit history in the applicant screening process to a small number of exceptions; primarily to those applicants who will have fiduciary roles if hired.


When utilizing credit reports in the hiring process, there are two primary factors employers and hiring managers should take into consideration:


  1. The laws and regulations governing the use of credit reports for employment purposes.

a) Employers and hiring managers should familiarize themselves with state/municipal laws that may limit the use of credit history in employment decisions. Some of the states/metropolitan areas with laws enacted to further regulate the use of credit history in the hiring process include: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, Washington, Chicago, New York City and Philadelphia. The primary objective of most laws enacted by these states and jurisdictions is to restrict the use of credit reports to ensure they are only utilized when the position includes fiduciary responsibilities or positions with high compensation and/or financial decision making authority.

  1. The relevance of the report in the hiring process.


The Society for Human Resource Management (SHRM) encourages employers to consider the nature of the position prior to using credit history in the hiring screening process. SHRM notes the following:

 If the responsibilities of the job call for the employee to handle money, assets, clients’ personal information, or proprietary company data, the information provided in the credit report may be very useful … If the position doesn’t require the applicant to have access to financial or proprietary company data, a credit report may not be needed.


Ultimately, it is the responsibility of hiring managers to ensure they remain in compliance with both the FCRA and any other applicable state or local laws and regulations.


For more information on using credit history in employment screening ensuring your hiring process is legally compliant, please contact A-Check Global via our contact page or 877-345-2021 today.

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