Consumer Credit Reporting Reform Act

The Consumer Credit Reporting Reform Act of 1996, which affects credit reports obtained for employment purposes, became effective on September 28, 1997. Some employers obtain credit reports to determine if the applicant can be bonded, which may be a requirement if the job position involves handling money. Under this law, employers who conduct credit checks on employees must:

1. Disclose to the employee or applicant in advance, the company's intention to obtain a credit report for employment purposes; and
2. Obtain written authorization from the employee/applicant to conduct the credit check.

Prior to taking action based on the report, the employer must provide to the employee/ applicant:

1. A copy of the report; and
2. A description in writing of the rights of the employee/applicant under this title, as prescribed by the Federal Trade Commission (to be provided by the Consumer Reporting Agency).