JOB APPLICANTS MUST BE TOLD BY EMPLOYER THAT BAD CREDIT REPORT RESULTED IN TURNDOWN

Credit reports increasingly are used by employers in checking the suitability of applicants for employment. It's legal under the Fair Credit Reporting Act (FCRA) so long as the self-correcting mechanisms built into this statute are allowed to work. That depends on employers complying with their obligation under the law to tell applicants that they may obtain a credit report, notify applicants when a credit report play a role in a denial, and giving denied applicants the information they need to access and check their credit reports at no cost.

The FCRA is intended to give consumers an opportunity, at no cost to them, to learn the contents of and challenge any incorrect information in their credit reports - which contain information about their credit and loan accounts, their bill paying habits and certain other identifying information, and which are compiled by consumer reporting agencies. Under the law, when a consumer is denied credit, insurance or employment based in whole or in part on information in his or her credit report, the denying company must notify the consumer that the report played a role in the denial and also give the consumer the name and address of the consumer reporting agency that supplied the consumer's credit report. Thereafter, the consumer can contact the credit reporting agency within 30 days to obtain a free copy of the credit report, check for errors and, if any are found, request that the agency reinvestigate and correct them. (Effective September 30, 1997, revisions to the FCRA require that a firm notify an applicant that it may obtain his or her credit report before doing so, and to obtain from the applicant a written acknowledgment of this fact. Those revisions also require that a firm in this situation give the adversely-affected consumer the telephone number of the relevant credit reporting agency and a statement of his or her rights under the FCRA to dispute the accuracy or completeness of the credit report.)