Do Employers Still Use Credit Reports for Hiring Decisions?
The short answer is yes, but not as often, and with certain limitations. As hiring practices evolve, many employers are rethinking the use of credit reports in the hiring process. While still common in finance, government, and executive roles, credit checks for other positions are increasingly scrutinized for their relevance, fairness, and legal risk. Why Some Employers Still Use Them:
- To assess financial responsibility for roles involving access to money or sensitive data
- To comply with industry regulations
- To help mitigate fraud or identity risks
Why Many Do Not Use Them:
- Credit history does not equal job performance
- Risk of discrimination or bias
- Growing legal restrictions at the state and local levels
- FCRA compliance requirements are strict and costly if mishandled
Several states and localities have laws that limit or ban private employers from conducting employment credit checks, except in specific roles. Best Practices for Employers:
- Use credit checks only when job-relevant
- Have policies in place defining what information on a credit report is disqualifying (note: credit reports do not show judgments or tax liens)
- If you’re a multi-state employer, consider eliminating credit checks if laws in one or more of your locations prohibit or limit these checks
- Always follow FCRA guidelines
Credit checks are no longer a default step in hiring–they’re a strategic choice that requires careful consideration.