Federal Fair Credit Reporting Act

A federal law, the Fair Credit Reporting Act requires credit agencies to share their data only with those who have a legitimate business need for the information, and employers generally qualify. Employers are given broad access to an individual's credit report, which they can use to evaluate eligibility for "employment, promotion, reassignment or retention." In short, as far as your employer or prospective employer is concerned, your credit rating is an open book. Credit bureaus typically track not only your bill-paying habits, but also all companies that have asked to see your credit rating when you apply for credit, insurance, a place to live or a new job. The result is that employers increasingly use credit bureau files to find out whether an employee is job hunting with other companies. And prospective employers may use a shaky credit report to conclude that it is risky to welcome you aboard. However, the Fair Credit Reporting Act also gives you some rights to know how and whether a current or prospective employer is using credit information about you. An employer must get your written permission before peeping at your credit report. And the words granting permission can't be buried deep within a job application form or other word-laden document; you have to sign separately to signal your approval.