What is the Fair Credit Reporting Act (FCRA)?

Use of information An individual has the right to know how his or her information is used. Specifically, if any type of consumer report is used to deny credit or employment, a copy of the report needs to be given to the applicant. Contents of the file An individual has the right to know what is contained in his or her file and has the right to know his or her credit score at any given time. In addition, there are time constraints on the contents of a report. No agency can report information that is more than seven years old or bankruptcies that are more than 10 years old. Right to dispute Every individual has the right to dispute the information that he or she thinks is incomplete or inaccurate, within 30 days from the time of receiving a report. Dissemination of information The Fair Credit Reporting Act stipulates that information about an individual’s credit can be given only to those organizations or people who have a valid need (as defined in the legislation). In the case of any violations, consumers have the right to legal action. Often, violations come to the fore during employment checks. So when can employers request credit information, and how? As an employer, you’ll need to follow certain procedures if using credit checks as part of your background screening program, in order to avoid violations and lawsuits. These include:

• Getting written permission from job applicants to perform these checks
• Telling them how this credit information will be used
• Assuring them that you will use not misuse this information
• Giving them a copy of the report, if you decide not to hire based on anything contained in it, along with the name, address, and phone number of the company that supplied the report
• Providing them an opportunity to dispute this information with the credit reporting agency before making a final decision