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Employers who order a background report must follow notice and consent rules under the Fair Credit Reporting Act. Work through this checklist before you apply so errors get fixed and you know what to expect.

This article is general information and isn’t financial or legal advice. Card terms, fees and rules change, so check the issuer’s current terms and official sources such as the Consumer Financial Protection Bureau and the Federal Trade Commission before you decide.

The essentials

1. An employer must give you a standalone written notice and get your written permission before ordering a background report that includes your credit history.
2. If a report could lead to a rejection or demotion, the employer must first hand you the report itself plus a federal summary that explains the protections the FCRA gives you.
3. You can pull a free credit report at AnnualCreditReport.com or by calling 1-877-322-8228, and reviewing it first gives you time to fix errors privately.
4. If you are turned down because of a background report, the employer must identify the reporting company and tell you that you can dispute inaccurate information.
5. Local laws in some cities and states place extra limits on credit questions during hiring, so look up the rules where you live before applying.

Some employers look at a credit report before making a hiring or promotion decision. Federal law treats that check as a background check, and it gives you specific rights along the way, including the chance to see what the employer will see and to fix mistakes before anyone else reads them. This checklist walks through when an employer can pull your report, what the check shows, and what the employer owes you at each step.

When an Employer Can Pull Your Credit Report

The Fair Credit Reporting Act (FCRA) is the federal law that governs how companies collect, share, and use information about you, including credit reports. The law lists the purposes for which a report can be supplied, and employment is one of them, often called a permissible purpose. If an employer plans to check your background, these rules apply:

• Notice first, in writing. Before ordering a report from a background reporting company, the employer must tell you in a standalone document that a report could factor into choices about hiring, promotion, or dismissal.
• The notice stands alone. It cannot be part of the employment application, so treat a permission request tucked into your paperwork as a signal to read slowly.
• Your written permission comes next. The employer must get your approval before asking the company to run the check, and the authorization can appear in the same document as the notice.
• Ongoing checks need clear language. If the employer wants to pull reports throughout your employment, it must say so plainly and prominently in what you sign.
• You can say no. Refusing is your right, but the employer may then decide not to hire you.
• Local rules may add limits. Some cities and states place their own conditions on whether an employer can ask about your credit history, and at what point in hiring those questions can come up.

What an Employment Credit Check Shows and What It Skips

A credit report is a record of how you have handled borrowed money. It shows whether you pay your bills on time or late, how much you owe, and whether anyone has sued you. Employers get it through a background reporting company, a business that compiles background information for employers. Under the FCRA, such a company counts as a consumer reporting agency, the same category of business that supplies credit reports to lenders, and it must follow reasonable procedures to keep what it sells as accurate as possible.

The report an employer orders may reach beyond credit:

• Criminal, employment, and driving history. A background report can combine your criminal record, your work history, and your driving record with your credit information.
• An employer does not need your permission to look you up online. The FTC notes that an employer can search social networking sites and other websites on its own, so the steps below focus on the background report, which is the part you can review and dispute.
• Credit checks are not universal. Practices vary, and in some states the law limits how credit reports in particular can be used in hiring, so whether a given employer checks credit depends on the employer and the state.

Your Checklist Before You Apply

The Federal Trade Commission (FTC) advises job seekers to review their credit report before applying, so errors can be corrected privately, before anyone evaluating the application comes across them. Work down this list:

• Pull your free copy. Go to AnnualCreditReport.com or call 1-877-322-8228 to request your free credit report.
• Read it section by section. Our guide on how to read your credit report walks through each part so you can check names, addresses, accounts, and payment records against your own records.
• Confirm everything belongs to you. Wrong middle names, unfamiliar accounts, and duplicated entries are the kinds of problems that can end up in an employment report, so flag anything that looks off.
• Ignore ads for quick fixes. Companies that promise to erase accurate negative information usually cannot do it, and some offers of free reports are not what they seem.
• Check local law. Look up the rules in your city and state before you apply, since some places limit when employers can bring up credit history.

How to Pull Your Own Report the Right Way

Getting your own report costs nothing and puts you in the same position as the employer, who will see what you see. Follow these steps:

• Use the official source. Request your report at AnnualCreditReport.com or by calling 1-877-322-8228, the FTC-backed route to your free report.
• Note the date you pulled it. Knowing when you checked helps you keep track of any disputes you file afterward.
• Compare it to your records. Match each account, balance, and payment entry against your statements so inaccuracies stand out.
• Keep what employers keep in mind. Late payments, amounts owed, and lawsuits appear on the report, so review those items with particular care.
• Prepare an explanation, not an argument. If you see an accurate item that might not look good, such as a stretch of late payments, you can be ready to explain the situation plainly if it comes up.

Errors to Fix and How to Dispute Them

Mistakes happen even at companies required to follow reasonable accuracy procedures. The FTC has flagged warning signs such as reports listing convictions for people with a different middle name or date of birth, several entries for the same offense, and records that were expunged or sealed. If you spot anything wrong on your credit report, move quickly:

• Dispute with the reporting company. Contact the company that issued the report and follow its instructions for challenging information you believe is inaccurate or incomplete.
• Dispute with each credit bureau too. If the error appears on reports from the nationwide bureaus, file with each one that shows it, so a correction follows the report wherever it is requested.
• Be specific in writing. Identify the account, the item, and exactly what is wrong, and state what the correct information should be.
• Watch for identity theft. Unfamiliar accounts can mean someone opened credit in your name; our article on what to do if someone opens credit in your name covers the recovery steps.
• Track your disputes. Keep copies of what you sent and when, so you can follow up if the error reappears.

What Employers Must Tell You Before and After a Check

The FCRA builds in two checkpoints for you, one before the employer acts and one after:

• Before any decision: if the employer is weighing whether to turn down your application, move a current employee to a different role, end someone’s employment, decline a promotion, or make any other negative decision based on a report, it must first give you a notice that comes with a copy of the report it relied on, plus a federal summary sheet that spells out the protections the FCRA provides.
• The point of the advance copy is review time. Receiving the report ahead of the decision gives you the chance to look it over and tell the employer if something on it is wrong.
• The employer also faces certification duties upstream. Background reporting companies must collect certifications from employer clients confirming that the applicant was notified and gave written permission, and that the employer will follow FCRA requirements and not misuse the information.

If Something on Your Report Costs You the Job

A rejection based on a background report is not a dead end. The employer has to hand you what you need to challenge it:

• You must receive identifying details. If information in a background report leads an employer to pass over your application or decline you for a promotion, the employer must tell you, by phone, in writing, or electronically, the name, address, and phone number of the background reporting company.
• The company did not decide. The notice must say that the background reporting company did not make the decision and cannot give specific reasons for it.
• You can dispute. You have the right to challenge anything on the report that is inaccurate or incomplete by contacting the company and following its dispute instructions.
• Expect paperwork afterward. Notices tied to report-based decisions often arrive in the mail and can look like routine letters; our article on why you got an adverse action notice explains what those letters mean and how to act on them.
• Discrimination is separate. If an employer appears to rule out every applicant with a criminal record, the FTC suggests reporting it to the Equal Employment Opportunity Commission (EEOC), the federal agency that handles employment discrimination.
• Follow up if the error comes back. Corrections sometimes fail to stick, so check later copies of your report to confirm the disputed item was actually fixed or removed.

Start today by pulling your free credit report at AnnualCreditReport.com and marking anything that needs a dispute before you fill out another application.

Questions and answers

Can I refuse an employment credit check?

Yes. You have the right to say no to a background check, though the employer may then decide not to hire you.

What does an employment credit check show?

It shows whether you pay your bills on time or late, how much you owe, and whether someone has sued you. The broader background report can also include criminal, employment, and driving history.

Do all employers check credit before hiring?

No. Practices vary, and in some states the law limits how credit reports in particular can be used in hiring decisions.

What should I do if the report has errors?

Dispute inaccurate or incomplete information with the background reporting company, following its instructions, and repeat the dispute with each credit bureau that shows the mistake.