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When can I obtain credit information about my applicants?

Your credit report contains sensitive Personally Identifiable Information (PII) so, as you can imagine, there are many laws and regulations (Federal, State and/or Local) that govern the release of this information. Here are some of the most important points:

  • Credit reports may only be requested for a specific Permissible Purpose. The Fair Credit Reporting Act (FCRA) defines the acceptable reasons for obtaining a consumer credit report and the civil and criminal penalties for not complying with the FCRA.
  • In most cases credit reports may only be requested AFTER the consumer has provided signed authorization to the requester giving them permission to obtain a credit report for one specific use.
  • The credit bureaus (TransUnion, Equifax, Experian), also called Nationwide Consumer Reporting Agencies, require all End Users of credit reports to undergo an on-site inspection to assure that they are a legitimate business and are not trying to obtain this information for an illegal or unauthorized purpose.  The inspection process also examines how prepared an End User is to safely and securely request, maintain and destroy the PII they will receive.
    • For these reasons, individuals who run a business out of their home and do not maintain a separate, secure business office are not able to receive consumer credit reports.
  • Several states have placed additional restrictions on the use of consumer credit reports.  Oregon is one state that specifically restricts the consideration of consumer credit information in most hiring decisions.  Employers, here is a summary of credit reporting laws in all 50 states as of March 2013.
  • You have rights and protections whenever your credit report is obtained.  Consumers, here is a A Summary of Your Rights Under the Fair Credit Reporting Act.