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10 Things You Should Know to Limit Liability When it Comes to the Use of Credit Reports in the Hiring Process

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One of the most problematic, and at times the most useful consumer reports acquired during the hiring/promotion process is the employee/applicant’s credit report. Its “misuse” have led companies towards heavy fines and penalties as class defendants before FCRA. In many states the use of a credit report is becoming illegal for the purposes of making a hiring decision.

Here is a checklist for streamlining your HR processes for hiring and promotions, and limiting your liability during screening, by rigorously incorporating policies for accessing and using credit reports.  There are also safe alternatives to Credit Reports, which can provide you with objective results, but without the concern for liability.  To learn more about those alternatives, ask your background screening company to tell you about a Bankruptcies, Liens and Judgements Search.

How to Limit Liability and Avoid Becoming an FCRA Defendant When Using
Consumer Reports

#1 to #7 — Disclosure and Consent of Your Employees

Yes, disclosing your intention for acquiring credit reports for the employee/applicant and taking their consent thereof is that important.

Hence, even before you get a credit report, you are bound to do the following:

1. Inform the candidate or existing employee that you might use the information supplied by the consumer report for making decision about hiring/employment/promotion.
2. Gain written permission from the applicant/employee before proceeding

Additionally, a reputable background screening company will inquire that you certify that the credit report you seek is in compliance with FCRA.

What You Should Do? 

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