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New York City May Limit Employer Credit Checks – But Most Jurisdictions Don’t

Crain’s New York Business recently reported that a ban on employer credit checks is being debated in New York City. It’s too early to tell if the proposal will get an official hearing, let alone pass and become law. 

Some states and local jurisdictions have moved in recent years to restrict the use of employer credit checks. However, under the Federal Fair Credit Reporting Act, employers may legally access the credit reports of job applicants, and most moves to restrict the practice have merely limited it, without ending it altogether. 

Employer Credit Checks Are Common
Whether the proposal passes in New York City – and to what degree it will limit employer credit checks – is unknown. Job applicants should fully expect that their credit report will be checked by future employers, regardless of where they live, or where the job is that they are applying for. 

Most employers have language written into their job postings that make it clear that the applicant’s employment will be subject to a credit check. They will have the applicant sign an authorization form that specifically allows them to obtain the credit report from the credit bureaus.

Credit checks are especially prevalent in applying for jobs in finance, or in any position that involves management or the handling of money. But many employers do credit checks even for jobs where credit wouldn’t seem to be important.

If the credit report is deemed to be unsatisfactory, the applicant may be rejected for the position. And unlike being denied for credit, the applicant will never know the real reason for the rejection.

Assume Your Credit Will Be Checked – And Be Prepared
As a college student, it’s not too early to prepare for an employer credit check. This is important for any part-time or summer jobs you may apply for during your school years. But it’s even more important in connection with your first career-type position at graduation. If you have some credit problems, now is the time to work them out.

As a first step, it’s important to begin monitoring your credit now, that way you will have a chance to create your best credit report before the stakes are much higher than they are now.

Regular monitoring will help you to:
1. Identify and correct credit errors
2. Work to improve any derogatory information your credit report may contain
3. Monitor your credit report for fraudulent activity
4. Begin building a stronger credit profile by paying your loans on time, and keeping your debt levels to a minimum

If you can improve your credit now, you’ll be able to remove negative credit information that might limit your employment opportunities later. If you let it go and assume your credit is fine, you may miss out on some good jobs before even finding out that your credit may have been the problem. Monitoring your credit on a regular basis is the best way to avoid unpleasant surprises when you apply for a job.