Whether an employer can run a credit check on you depends heavily on where you live — employer credit checks have been widely restricted over the last 15 years. Roughly 11 states (CA, CO, CT, DC, HI, IL, MD, NV, OR, VT, WA) plus several cities limit employer use of credit reports in hiring and employment decisions, and the federal Fair Credit Reporting Act (FCRA) applies on top of state law with procedural requirements: stand-alone disclosure, written authorization, and pre-adverse-action notice. The specifics depend on where you live and the job, and these laws continue to change.
The structural shift was driven by research showing that credit reports have only weak predictive value for job performance and that they disproportionately disadvantage Black, Hispanic, and low-income applicants — creating both equity and disparate-impact concerns.
What does federal law (the FCRA) say?
The FTC and EEOC describe a set of procedural steps the FCRA generally requires before an employer uses a consumer report (which includes credit reports). How they apply depends on your situation:
- Disclosure: Under the FCRA, an employer is generally required to disclose in a stand-alone written document that a consumer report will be obtained.
- Authorization: The FCRA generally requires the employer to obtain the applicant's written authorization.
- Pre-adverse action: Before taking adverse action based on the report, an employer is generally required to provide a copy of the report and a summary of FCRA rights.
- Adverse action: After taking action, the FCRA generally requires an adverse-action notice with consumer reporting agency information.
- Stand-alone disclosure rule: The FTC reads the FCRA to require that the disclosure appear in a document consisting "solely" of the disclosure. Combining it with other application materials (waivers, additional notices) is a commonly cited FCRA violation that has spawned major class actions.
How does this vary by state?
State law varies a great deal here, and your state may differ. Most state credit-check laws follow a similar pattern: they generally prohibit employers from obtaining or using credit reports for hiring except in specific categories. Common exempted categories include:
- Positions involving access to substantial funds or financial information
- Senior management positions (varying definitions)
- Positions involving access to trade secrets or confidential financial information
- Positions involving fiduciary responsibility
- Positions in financial services or with specific regulatory requirements (banks, securities)
For most workers in most jobs, the relevant state law generally prohibits the credit check entirely. The procedural FCRA rules typically apply only where the substantive state law permits the check.
Specific state highlights (these statutes continue to change — confirm the current text for your state):
- California: Generally permits credit checks only for specific positions (managerial, financial, law enforcement, etc.), and the law generally requires the employer to disclose the basis for the exemption.
- New York City: The Stop Credit Discrimination in Employment Act generally prohibits credit checks broadly, with narrow exceptions.
- Illinois: The Employee Credit Privacy Act generally prohibits credit checks unless the position has specific financial duties.
- Colorado: The Employment Opportunity Act generally restricts credit checks for most positions.
What can you do about an employer credit check, step by step?
1. Checking whether your state restricts credit checks for the position
Most state laws have an enumerated list of exempt positions. A common first step is to find that list: if your role is not on it, the credit check may well be prohibited where you are. Whether your specific role qualifies for an exemption depends on your state's statute.
2. Looking at the FCRA procedural steps
Where the position is exempt and the credit check is permitted, many people walk through the FCRA steps the FTC and EEOC describe:
- Was the disclosure in a stand-alone document?
- Did you sign a clear authorization?
- Did you receive a pre-adverse-action notice with a copy of the report?
- Did you receive an adverse-action notice after the decision?
The FTC and EEOC treat missing or defective procedures as a basis for FCRA claims regardless of the substantive outcome.
3. Pulling your own credit report
Many people get the free annual reports from each of the three major bureaus via annualcreditreport.com (the site authorized under federal law), check them for accuracy, and dispute any errors.
Scripts people sometimes use
Disputing a credit check in a restricted jurisdiction:
"I am located in [state]. Under [state law], credit checks are restricted to specific position categories. The position I applied for does not appear to fall within the enumerated exceptions. Could you clarify the basis for conducting a credit check, and provide a copy of the disclosure and authorization I signed?"
Responding to a pre-adverse-action notice:
"I have reviewed the credit report. I want to provide context regarding [specific items]. The challenges occurred [period] due to [briefly explain]. Since then, I have [recovery evidence]. The financial issues are unrelated to my ability to perform the duties of this position, which involve [job-specific duties]. I respectfully ask for reconsideration."
Disputing a stand-alone disclosure violation:
"I'd like to request a copy of the disclosure document that authorized the credit check. Specifically, I'd like to confirm whether the disclosure was provided in a stand-alone document as required by 15 U.S.C. § 1681b(b)(2)(A), or whether it was combined with other application materials."
What should you keep on file?
- The application materials and any FCRA disclosure/authorization
- The position description and duties
- Communications about the credit check
- The credit report itself (request from the consumer reporting agency)
- Pre-adverse and adverse-action notices
- Your own contemporaneous credit report and any dispute records
Where can you escalate?
When someone suspects an employer violated the FCRA or state credit-check rules, common steps include:
- Filing a CFPB complaint for FCRA violations. The CFPB has been active on stand-alone disclosure cases.
- Filing with your state attorney general for state-law violations.
- Consulting an employment attorney about class-action treatment. The FTC treats FCRA stand-alone disclosure violations as statutorily defined, and they frequently support class certification.
- Where a credit-check policy disproportionately disadvantages Black and Hispanic applicants, the EEOC treats this as a potential disparate-impact issue under the discrimination laws it enforces.
Under the FCRA, statutory damages are generally set at $100–$1,000 per willful violation, plus attorney's fees — which can make even small individual claims viable, and class actions multiply the damages. The structural defects in many employer credit-check programs (combined disclosure-and-waiver documents, missing pre-adverse notice) make these claims relatively common. The figures and the specifics depend on your situation and can change.
Official sources
- U.S. EEOC & FTC — Background Checks: What Employers Need to Know (joint guidance on FCRA procedures and discrimination concerns)
- Consumer Financial Protection Bureau — Credit reports and scores
- Consumer Financial Protection Bureau — Submit a complaint