If an employer takes any adverse action regarding an employee based on information in his credit file, he has to follow certain legal procedures, which failing to do could result in a lawsuit against the employer by state and national government agencies.
The employer should tell you that he might use the information in your credit report to make a decision regarding your future employment. This notification is separate from other documents like the job application. The employer cannot get a report about you for a common purpose without getting your permission or authorization first which is usually in written.
Pre-adverse action procedures
If the employer uses the information in your credit file or any other background report to take adverse action against you such as denying your employment or promotion or terminating yours employment or reassigning you, he must give you a copy of the report and a document called a summary of your rights under the fair credit report act before taking the adverse action. Read the report and contact the company that issued it if you think it has inaccurate or incomplete information.
You can try explaining the negative information into your employer which might work to your advantage but that will not fix the errors themselves on your credit report. In order to do so you need to contact the credit bureau and file a dispute. If the dispute results in a revelation that the information is indeed incorrect or inaccurate, the credit reporting company has to correct that information and send an updated report to the employer if you ask them to.
You must always make an effort to keep your credit report as accurate as possible. Even if you do not see any benefit in the short term, having an accurate credit report is important for any and all future need and requirement.
Adverse action procedure
If the employer takes an adverse action against you based on the information contained in your credit file, he must inform you already, in writing or electronically about it. The notice must include the name and address and phone number of the credit reporting agency that supplies the credit report or these background information.
The employer must issue a statement that the company that supplied the information didn’t make the decision to take this adverse action and cannot give you any specific reasons for it.
He must provide you with a notice that says you can dispute the accuracy or completeness of any information in your credit report and to get an additional fee report from the company that supplied the credit or other background information if you ask for it within 60 days.
What happens when employers do not comply with the FTC
There can be legal repercussions for employers who do not comply by the guidelines laid down by the FC are. Whether they failed to get written permission from the employee before getting a copy of their credit file or any other background report, failed to provide the appropriate disclosures in a timely way, failed to provide adverse action notice to unsuccessful job applicants, they can be sued by FTC, as well as other federal and agencies and the state. If you think an employer has violated the guidelines laid down by the fair credit reporting act, you can report it to the Federal Trade Commission.
Notice of negative public records
If the credit reporting bureau provides employers with a credit report that has negative information about you gathered from public records such as tax liens, court judgments, bankruptcy filing or criminal conviction, that company either has to tell you that it provided information to the employer or it has to take special steps to make sure that the information is accurate.
If you do get a notice that her company has provided negative public record information to a potential employer you may have the opportunity to correct or clarify it which may help you get the job.