Resource Center

Credit Reports and the FCRA

Question: If I’m not running credit reports, does the Fair Credit Reporting Act still apply? 

Response & Analysis:

Yes. A credit report is only one of several checks that fall under the definition of a “consumer report.” The Fair Credit Reporting Act (“FCRA”) applies anytime a company procures a “consumer report” on an applicant or employee. Section 603(d) of the FCRA defines a consumer report as:

“any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for ... employment.” Pursuant to Federal Trade Commission (“FTC”) opinions, independent contractors fall within the definition of “employment.”

In addition to a credit report, this definition of a consumer report would cover many other types of background information, such as criminal history checks, employment verifications and license checks. So even if you choose not to run a credit report on an applicant or an employee, many of the other background checks you run – including just public record information – will fall under the definition of a “consumer report.” Thus, you are subject to the requirements of the FCRA even if you do not run credit reports.

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This document and/or presentation is provided as a service to our customers. Its contents are designed solely for informational purposes, and should not be inferred or understood as legal advice or binding case law, nor shared with any third parties. Persons in need of legal assistance should seek the advice of competent legal counsel. Although care has been taken in preparation of these materials, we cannot guarantee the accuracy, currency or completeness of the information contained within it. Anyone using this information does so at his or her own risk.

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