Credit Reports Have Been A Mainstay For Many Employment Positions & For Any Landlord / Tenant Placements … But Change Is Coming*

Employment Background Solutions provides you direct access to a Credit History reseller that is Fair Credit Reporting Act (FCRA) compliant for employment and rental property purposes.

* Current Trends:
Recently the use of credit reports in employment scenarios is coming under greater scrutiny by Government through proposed legislation. Many states are considering or have passed legislation that limits or prohibits the use of credit reports in making hiring decisions.

The concept is that the raw report itself can be discriminatory against the applicant based upon socio-economic factors beyond the applicant's control.

Example: The applicant needs a job to pay off their creditors and delinquent bills. They have a low score due to late payments or overdue accounts. The applicant is denied a job due to their poor credit history. As such, the applicant still needs a job, they still cannot pay their bills and their credit status continues to suffer. Despite the fact that factors beyond the applicant’s control (the recession, cut backs, lay-offs & downsizing of business) helped create the poor credit history. But it is that same history that is creating a vicious cycle that is detrimental to the applicant.

Some laws are allowing for an exemption that would permit the use of credit reports for positions or industries such as banking, insurance, corporate or trade secret management as well as areas of national or state security. The key is demonstrating a specific justification for the use of a credit report in these fields.

It is best to consult your legal department or legal advisor for the current status of this issue in your state. Also to review your hiring or placement policies so they are compliant under the Fair Credit Reporting Act (FCRA) and non-disparate under the Equal Employment Opportunity Commission (EEOC) guidelines. Ensuring that you policies are fair, equitable and reflect a job related business necessity.

Credit Reports (employment) & Credit Reports with FICO Score (landlord / tenant): (Results within minutes)

Credit reports used for employment background check purposes are not the same as a standard credit report. The Fair Credit Reporting Act (FCRA) specifies that certain account information must be stripped from the employee background check credit report before it can be used for employment purposes.

For Employment Purposes: An employer should first determine if there is a sound business reason to obtain a credit report. Unless the information in a credit report is directly job related, its use can be considered discriminatory. For example, running a credit report for an entry-level person with low levels of responsibility or no access to cash is probably not a best policy practice to follow.

For Landlord / Tenant Purposes: Credit reports with FICO offer a picture of the financial level of responsibility over an extended period of time demonstrated by the applicant. (See "Soft Hit" vs. "Hard Hit" Credit Reports section below for more information.)

Credit Report Information Source: Effective April 1, 2011 Employment Background Solutions no longer is an affiliate provider of credit reports. Due to the current trends discussed above and the efforts of the credit industry to tight the flow of sensitive personal information.

For your convenience we do have a relationship with a direct reseller of Experian credit product for hiring or landlord placement needs. Note: This will require you to become an end user client of theirs for credit reports and does require your business to pass a vetting process.

Contact EBS for more information on how to become an identified end user of credit reports.


FAQ on Credit Reports:

What Is FICO Scoring?
FICO scoring is a combination of various components such as payment history, credit use, credit line longevity, types of credit accounts & recent credit inquiries made against the person.

It is designed to provide a quick glance at the risk level associated to a person when factoring the default potential where money or property is at stake. The theory is the higher the FICO number, the lower the risk & just the opposite for low FICO numbers. As these demonstrate a possible poor track record in financial or credit practices.

What Rating is Associated To A FICO Score?
FICO scores are broken down as follows:

What are "Soft Hit" vs. "Hard Hit" Credit Reports?
For Employers (Soft Hits):
Employers seek credit reports on job applicants for a variety of reasons. Some employers utilize a credit report to verify that an applicant is responsible and reliable or to confirm identity. Since these employment inquiries do not affect the credit rating of the applicant they are known as "soft Hits". No FICO score can be associated to employment requests.

Landlord / Tenant requests (Hard Hits):
However those credit reports requested in landlord / tenant / property rental scenario can have an effect on the credit rating and FICO score. As such they are considered as "Hard Hits" on the applicants credit report.