Where Employers Can't Check Your Credit

In most of the country, a potential employer can review your credit report when evaluating you for a job you applied for, and it’s a very controversial practice, to say the least. There’s a growing movement to restrict these credit checks, and on May 6, New York City Mayor Bill de Blasio signed a law preventing most employers from requesting or using a job applicant’s credit history in the hiring process.

Last year, 39 bills were introduced in 19 states aimed at restricting employer credit checks, but such restrictions exist in only 11 states, according to the National Conference of State Legislatures. New York state isn’t among them (though legislation was proposed on a state level last year), but the changes in New York City affect millions of workers.

“Using credit checks during the hiring process to screen applicants disproportionately affects low-income applicants and applicants of color, and this legislation prevents the vast majority of employers from doing so,” reads a news release from the mayor’s office. There are exceptions to this ban on credit checks: Credit checks are still allowed for “law enforcement and other professions involving a high level of public trust or access to sensitive information,” in addition to employers who must run employee credit checks under federal law.

The vast majority of employers don’t check prospective employees’ credit — in a 2012 survey from the Society of Human Resource Management, only 13% of respondents said they check all employees’ credit history, and 53% of hiring managers said they don’t do it at all. Still, it’s something many consumers worry about. It’s a good idea to review your free annual credit reports before applying for jobs to make sure they’re free of inaccurate information (here’s how to dispute errors) and that you can explain any negative information they may contain.

If you work in one of the 11 states with laws restricting employer credit checks, you may not have as much to worry about. There are exceptions to the restrictions, so you should check individual states’ policies if you’re concerned, but here are the states where there are laws prohibiting employers from checking applicants’ credit under certain circumstances:

California
Colorado
Connecticut
Delaware
Hawaii
Illinois
Maryland
Nevada
Oregon
Vermont
Washington

Keep in mind that employer credit checks are limited to credit reports — a potential employer can’t request your credit scores. It’s a good idea for you to review your scores (you can get two free credit scores, updated every 14 days, from Credit.com), because they are based on credit reports and can alert you to issues that may arise between times you review your credit reports.