It is a sadly familiar state of affairs that the rich get richer while everyone else stays poor. A career counselor may once have told you that it is easier to get a job when you already have a job, and you did not want to believe it, but the career counselor turned out to be right about that. Just as the more money you have in the bank, the less interest you pay for loans and the more money you can borrow, it is easiest to get a job when you need one the least. Your credit report is a record of your past financial hardships as well as your ongoing ones.
To make matters worse, it only sometimes shows how successful you have been in sticking to a budget and living within your means. The law limits the extent to which employers can hold it against you that you have struggled to keep up with payments on your bills, especially since, by applying for jobs, you are attempting to get employment income with which to repay your debts. The Spokane Fair Credit Reporting Act lawyers at HKM Employment Attorneys LLP can help you understand your rights related to credit reporting and can help you resolve disputes with prospective employers who treat you unfairly because of your financial history.
Credit Score and Credit Report Basics
Your credit score is a number between 300 and 850 that reflects your anticipated ability to repay a debt in the event that you borrow money in the near future. The higher your credit score, the greater your creditworthiness; therefore, lenders tend to approve consumers with high credit scores for bigger loans and charge them lower interest rates. Consumers with low credit scores do not have access to low-interest loans; financial products that do not have a minimum credit score requirement tend to be risky and expensive. For example, payday loans and auto title loans target consumers whose low credit scores do not enable them to qualify for lower-risk options such as credit cards. These risky loans often have high interest rates and charge steep late fees, making it even more difficult for the consumers that use them to improve their credit scores. Since buy now pay later (BNPL) arrangements often accept all customers, regardless of credit score, these can also harm consumers who are in a vulnerable financial situation.
The three major credit reporting bureaus, namely Equifax, Experian, and TransUnion, issue credit reports showing a consumer’s credit score and the financial history on which that credit score is calculated. The credit reporting bureaus give different weights to various aspects of the consumer’s financial history, such as new loans borrowed and the amount repaid toward them, in determining the consumer’s credit score. Missing payments on credit cards and other loans lowers your credit score, as does filing for bankruptcy protection. Unfortunately, not every bill that you pay on time shows up on your credit report. Therefore, some people are stuck with low credit scores despite paying their rent and utilities on time every month for years.
The Federal Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) of 1970 is the ancestor of modern data privacy laws, even though it predates consumer use of the Internet. Before the FCRA went into effect, there were few laws regulating which information lenders could share with each other to inform their decisions about the risks associated with lending to a particular loan applicant. If John applied for a credit card, and the credit card asked the bank that issued John’s auto loan about his creditworthiness, there was nothing to stop the bank from sending the credit card company a letter saying, “John bought his expensive car in order to get attention from women. She spends lavishly on extramarital affairs, and when he thinks that he is in danger of his wife finding out about them, he spends lavishly on her, too.” With such juicy gossip, the credit card company employees might not even notice the part about how John has never missed a payment on his auto loan. In other words, lenders used to share information that was irrelevant to the consumers’ repayment history and was, at best, subjective and, at worst, malicious.
The FCRA standardized the items that can and should appear on consumers’ credit reports. It also limited access to consumers’ credit reports. The only people who have the right to access your credit report are you, lenders with whom you apply for loans, and employers with whom you apply for a job.
Your Rights Under the Washington Fair Credit Reporting Act
Washington has its own version of the FCRA as a state law, and it is even more specific about consumers’ rights than the federal FCRA. Both federal and state laws indicate that every consumer has the right to receive a copy of his or her credit report free of charge once per year. If you request another copy of your credit report less than a year after you most recently received one, federal law says that the credit reporting bureaus must charge a fee, but it is not specific about the amount, only indicating that it should be “reasonable.” The Washington Fair Credit Reporting Act limits the fee for subsequent credit report requests within the same year to eight dollars.
What Does Credit Reporting Have to Do With Employment Law?
Employers have the right to access job applicants’ credit reports, and in some cases, they may decide whether or not to hire the applicant based on the credit report. The law requires prospective employers to be transparent with job candidates about pre-employment credit checks, how the credit report factors into the hiring decision, and what the job candidate may do to dispute the credit report or the decision based on it.
Contact HKM Employment Attorneys, LLP, About Credit Reporting and Employment Law
The Spokane employment lawyers at HKM Employment Attorneys, LLP, can help you if your credit history is causing problems in your job search. Contact the employment lawyers at HKM Employment Attorneys LLP in Spokane, Washington, to set up a consultation.