The older generations grew up following a rule of social etiquette whereby you never discuss religion, politics, or sexuality in social situations except among your closest friends. The younger generations seem to have discarded this rule, as these topics dominate the news headlines that invite themselves to your phone screen at all hours of the day and night, even while you are at work, and mainstream newspapers spell out the f-word, whereas the journalists of the 1970s used to say “[expletive deleted].” Speaking honestly about one’s financial situation, however, remains off-limits. People post pictures of their big-ticket purchases on social media, but no one ever talks about whether they can afford them; you have no way of knowing who bought that Benz in cash and whose mom cosigned on a loan with a sky-high interest rate and a seven-year repayment term.
Likewise, people brag about the money they saved with little-known promotions, but you never find out how much of a difference the discount makes to their overall budget. All of this is to say that your coworkers and your employer know little about your overall financial situation, nor is it their business to know. The law does not explicitly consider your financial history a protected characteristic like your health history or family history, but it is against the law for employers to discriminate against you because of your credit score. The Fair Credit Reporting Act lawyers at HKM Employment Attorneys, LLP can help you understand your right to hold employment after suffering financial hardships.
What is a Credit Report, and What Does it Have to Do With Your Job?
The three credit reporting bureaus, namely Equifax, Experian, and TransUnion, compile data on consumers’ history of borrowing money and repaying it. When you apply for a loan or another financial commitment that would require you to pay for something in installments, the lender may access your credit report to inform its decision about your ability to repay the money you are requesting based on your currently outstanding financial obligations and your history of repaying previous debts. The credit report shows individual lines in which you paid installments on debts or failed to pay them. It also shows when you have paid off a debt in full or settled it for less than you originally owed. Bankruptcy filings also appear on your credit report. If you file for Chapter 13 bankruptcy, this will be visible on your credit report for seven years, whereas a Chapter 7 bankruptcy filing remains on your credit report for ten years.
The credit reporting bureaus summarize the risk level of lending to you in the form of a credit score, which is a number between 300 and 850; the higher your credit score, the better the position you are in to repay money that you borrow. Prospective lenders use your credit score to decide how much they are willing to lend you, as well as the interest rate at which they will lend it.
Landlords and rental companies also check your credit report when determining whether to rent to you. Your income alone does not tell them the whole story about whether you can afford to keep up with rent payments.
Employers may check job applicants’ credit reports during the job application process, just as they can check applicants’ history of interactions with the criminal justice system. In certain situations, employers may use an applicant’s credit history as a factor in hiring decisions.
Your Rights in San Francisco Under the Fair Credit Reporting Act
The Fair Credit Reporting Act of 1970 (FCRA) is a federal law that replaced a manifestly unfair system that lenders previously used when deciding whether to lend money to a prospective borrower. Before the FCRA went into effect, lenders could base their lending decisions on purely subjective judgments. They could also share information and views with each other about the perceived risks of lending to a particular applicant. It is easy to see how this led to a “rich get richer” system, as well as widespread racial discrimination in access to credit.
In addition to setting the stage for a unified and theoretically unbiased system of credit reporting, the FCRA affords consumers the following rights:
- The credit bureaus must provide you with a copy of your credit report if you request it.
- You have the right to dispute inaccurate information on your report. If you provide evidence that an item on your credit report is incorrect, the credit reporting bureaus must correct it.
- Any item on your credit report only stays for a limited amount of time. The credit reporting bureaus must remove expired items at the appropriate time.
- Anyone other than you who wishes to access your credit report must provide a valid justification for requesting it. For example, a prospective employer must notify the credit reporting bureaus that they are asking to access your credit report because you have applied for a job.
- If an employer uses your credit history as a basis for refusing to hire you or otherwise taking an adverse action against you, the employer must notify you of this. You have the right to review the credit report that the employer used as a basis for the decision, and you have the right to dispute the credit report and the decision.
What Should You Do if an Employer Unfairly Discriminates Against You Because of Your Financial History?
Employers must be transparent with job applicants about the ways in which they use credit reports in hiring decisions. They must also notify employees in writing when they are basing a decision on information contained in the employee’s or job applicant’s credit report. You have the right to tell your side of the story if an employer or prospective employer uses your financial history as a reason not to hire you or to take adverse action against you at work.
Contact HKM Employment Attorneys, LLP About the Fair Credit Reporting Act
The San Francisco employment lawyers at HKM Employment Attorneys, LLP can help you if your credit history is causing problems with your employer. Contact the employment lawyers at HKM Employment Attorneys LLP in San Francisco, California, to set up a consultation.