A common misconception is that all standard background checks also contain credit reports. However, employment background checks typically only contain credit reports for job positions that are financially sensitive. Employment background credit reports never contain credit scores. On the other hand, tenant background reports always contain credit reports that include credit scores.
Fair Credit Reporting Act
Even though the Fair Credit Reporting Act contains the word "credit," its rules go far beyond credit reports. The FCRA addresses the rights and obligations of third-party background check companies, private investigators who regularly conduct background screenings, credit card companies and other entities that report payment histories to the major national credit collecting agencies and consumers. Under the FCRA, consumers can obtain their background credit reports and request corrections to any inaccuracies contained within them.
Employment Background Checks
In general, employers are more interested in verifying information on an applicant's job application, such as past employment and criminal history, than conducting a more comprehensive investigation into the person's background. Employers primarily request credit checks for managerial and execution positions, as well as for jobs in which employees have access to cash, assets, corporate credit cards or other sensitive business financial information. For example, an employer would not likely conduct credit checks for entry-level, low-responsibility jobs.
Credit Checks for Employment Purposes
An employer cannot obtain a credit report without first obtaining the candidate's written permission. Employers generally request one of the major credit bureaus' special employment reports, such as TransUnion's "Employment Credit Report," Experian's "Employment Insight Report" or Equifax's "PERSONA PLUS" Within these reports, employers look for such information as late payments, collections, defaults and closed accounts. Employers cannot use any report data to deny a job until the applicant reviews its information.
A credit score measures a consumer's credit risk. The credit score calculation includes a person's payment history, amounts owed, length of credit history, new credit inquiries and types of credit. Credit scores are not included in credit checks for employment purposes because employment inquiries are not credit inquiries. Also, employers' credit inquires are not noted in applicants' credit reports, so these inquires do not have adverse effects. Tenant background reports, however, include credit scores.
Tenant Background Checks
Landlords want to rent to people who are stable, reliable and financially secure. One key part of a tenant background report is a credit check, which provides an overview of the person's financial character and capability to fulfill fiscal responsibilities. A credit check for a tenant includes previous evictions, a credit history and a credit score. Prior to commencing a background check and credit history, a landlord must obtain the person's written authorization.
- "The Safe Hiring Manual"; Lester S. Rosen; 2007
- "Sleuthing 101: Background Checks and The Law"; Barry Nadall; 2005
- Advantus: Credit Scores and Credit Score Meaning
- Experian. "What Is Credit?" Accessed July 2, 2020.
- Experian. "Does Your Income Appear on Your Credit Reports?" Accessed July 2, 2020.
- Experian. "What Are Credit Bureaus and How Do They Work?" Accessed July 2, 2020.
- Experian. "What Is a Credit Report?" Accessed July 2, 2020.
- Federal Trade Commission. "Free Credit Reports." Accessed July 2, 2020.
- Experian. "Will Your Score Go Down If You Check It?" Accessed July 2, 2020.
- Experian. "My Credit Score." Accessed July 2, 2020.
- Experian. "What Is a Good Credit Score?" Accessed July 2, 2020.
- Equifax. "How Can I Check Credit Scores?" Accessed July 2, 2020.
- TransUnion. "What Goes Into Your Home Insurance Score?" Accessed July 2, 2020.
- Experian. "Do Employers Check Credit Scores?" Accessed July 2, 2020.
- Federal Trade Commission. "Utility Services." Accessed July 2, 2020.
- Experian. "How to Get an Apartment With Bad Credit." Accessed July 2, 2020.
- National Consumer Law Center. "Past Imperfect: How Credit Scores and Other Analytics 'Bake In' and Perpetuate Past Discrimination." Accessed July 2, 2020.
In 1997 Harlequin published Colleen Collins' first novel, followed by many more by Harlequin and Dorchester. Her articles and writing have appeared in "P.I. Magazine," "Pursuit Magazine" and "Cosmopolitan." She earned a B.A. in theater arts from University of California, Santa Barbara and is an active member of Mystery Writers of America.