What is the Fair Credit Reporting Act?

And what is an FCRA compliant background check?

FCRA stands for Fair Credit Reporting Act and it dates back to 1970. It states that landlords, lenders, and employers are not allowed to deny you any credit opportunities based upon your civil, criminal, or financial shortcomings unless the information is up to date and accurate. Additionally, the consumer has the right to dispute their findings.

That’s a lot to swallow all at once, so let’s break it down.

Linda is looking to hire a new teller at her bank. Bob applies for the job and Linda wants to make sure he doesn’t have a criminal record. She goes online and uses some online background checking tools and finds out that Bob has been convicted of embezzlement in Franklin County Ohio. Linda tells Bob that he did not get the job because of his criminal history. Bob is now suing Linda for denying him employment based upon faulty data. Linda soon finds herself in a difficult legal situation.

Linda did two things wrong: She did not give Bob the opportunity to dispute her findings and she did not verify that her findings were current and accurate.

Section 611 of the Fair Credit Reporting Act outlines the procedures and timelines that are a requirement for a background check. Linda was supposed to share with Bob her adverse findings on his criminal background check. She was supposed to give him the opportunity to dispute those findings. This is commonly referred to as “reinvestigation”

Section 613 stipulates that the CRA (Credit Reporting Agency – in this case, Linda) needs to verify that the findings are current and accurate. For criminal records, this means verifying the data against the source record keeper – in this case, the courthouse.

While Bob and Linda are fictional characters in a make-believe world, stories of people being denied credit, employment, or housing are all too common. If you’re a consumer, know your rights – and if you’re a lender or employer, seek an FCRA compliant data vendor!

For more information, we encourage you to read about this process on the FTC’s website or see the PDF below

https://www.consumer.ftc.gov/articles/pdf-0111-fair-credit-reporting-act.pdf