difference in a lender and employer credit report

These days, running a background check on a candidate during the recruiting process is common practice. Most employers know they need to get consent in a stand alone form and provide the results of the check to the candidate in some cases (for more information on this see the EEOC’s website: https://www.eeoc.gov/eeoc/publications/background_checks_employers.cfm)

But what about requesting a candidate’s credit as a part of the background check? After all, in most cases, the more information that you can find to help with your hiring decision the better.

When to request a credit report

While credit reports are a part of the domestic screening services that Accurate Information Systems (AIS) offers, not all employers requesting screening services should be asking for one.

Kevin McCrann, President of AIS says “We really try to tell our clients (the employers requesting the reports) that a credit report should not be requested unless the applicant will be working in a fiduciary role. There are a lot of “gray” areas in credit reports.”

Don’t request a credit report unless the candidate is applying for a fiduciary role.

How to request a credit report

When an employer is hiring for a fiduciary role (ie has a permissible purpose for requesting a credit check) it is important to note that, just like a criminal record check, an employer must make a full disclosure to the candidate that they may pull the candidate’s credit report. The employer must then get authorization from the candidate to obtain a report.

The company that works with you to obtain the report should walk you through these steps to ensure full compliance with the fair credit reporting act. If they don’t, consider it a huge red flag and look for another company.

What does a credit report look like?

Pre-Employment Background ScreeningThe credit report will be very similar to a lender credit report. The major difference between the report that an employer can request and one a lender can request: a credit score is reported to the lender but not the employer.

So how does it work?

Like most lender credit reports, the credit reports conducted by a company like AIS for the purposes of pre-employment will not affect the candidate’s credit score (ie it is considered a “soft pull”).

A sample employee background screening report from AIS can be downloaded here.

Under no circumstances does an employer have a permissible purpose to pull a credit report that has a score.

How to use (and NOT use) a credit report

Before making a hiring decision about a candidate based in whole, or in part, on the credit report, it is important to check your state’s laws. Many states and cities now prohibit the use of credit information for employment related decisions. (These states are: California, Colorado, Connecticut, Delaware, District of Columbia (D.C.), Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington. New York will also be added to this list.)

Even if the employer resides in a state where it is still permissible to use information from the credit report in the hiring decision, employers are still not allowed to use certain information from the report. For example, any credit lines that are referred to as “medical” can’t be used.


With all of the rules and regulations around credit reports, it is best to speak with a qualified professional before requesting a credit report on a job candidate.

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