A credit check on a job applicant doesn't work like the credit check your bank runs before it approves a loan. That surprises a lot of employers the first time they actually read one.
Before you add this check to any screening package, you need answers to two separate questions. Is it even legal where you're hiring? And once the report comes back, does it actually tell you anything useful for this job? Let's take those one at a time.
One thing up front. This is one of the fastest-moving corners of screening law right now. States keep adding or changing rules on employment credit checks, sometimes more than once in a year. Treat everything below as a map, not a final answer. Check the current rule for your state with a lawyer or your background check company's compliance team before you rely on it.
Under the Fair Credit Reporting Act, the federal law behind almost every background check, you need two things before you pull one. Written authorization from the candidate. A clear disclosure telling them you're doing it. And a permissible purpose, meaning a real business reason tied to the job. That applies every single time. There's no "quick look" exception.
Here's the part that surprises people. An employment credit check registers as what's called a soft inquiry. It doesn't touch the candidate's credit score. It doesn't show up when a lender or another employer looks at their file the way a hard pull would, the kind that happens when someone applies for a car loan.
So to say that again a different way: running this check costs the candidate nothing on their credit, even if you turn them down for the job.
And no employer ever sees a FICO score on this report. That number just isn't part of what gets sent over. What you get instead looks more like a financial history summary:
What you won't get matters just as much. No medical debt detail beyond what a public record already discloses. No line-by-line purchase history. No bank account balance. If a vendor tries to sell you a "full financial picture," be skeptical. That's not what this product is.
Most requests for a credit check trace back to a handful of roles. Jobs with signing authority over company funds. Cash handling. Accounting and finance positions. Executive hires. Some licensed financial services jobs where a regulator requires it.
The logic makes sense on its face. If someone will control money, you'd like some signal about how they've handled their own.
Here's where it gets contested. Critics of employment credit checks, and there are a lot of them now, point out that bad credit usually tracks something like a divorce, a medical bill, or a stretch of unemployment. Not dishonesty. Not how someone will actually perform on the job. That pattern has also been shown to land harder on lower-income and minority applicants. That's the argument driving most of the recent state restrictions, and it's worth taking seriously even if you land on running the check anyway.
That tension, an employer's real risk-management interest against a real disparate-impact concern, is exactly why this map keeps shifting state by state. Neither side is simply wrong. They're weighing different things.
New York has been in the news this year for moving to restrict employment credit checks statewide, extending a rule that used to only apply inside New York City.
I'm intentionally not going to hand you a bill number or an exact effective date here. Those details move fast, sometimes between when a bill passes and when it actually takes effect. Getting them wrong in an article like this doesn't help you. Look up the current text yourself, or ask your screening provider's compliance team, before you change anything about how you screen candidates in New York.
What I can tell you with more confidence is the general shape these laws tend to take. They usually bar employers from requesting or using credit history, including reports, scores, and payment records, in decisions about hiring, promotion, pay, discipline, or firing. Most apply to current employees, not just applicants.
Most also carry a handful of exemptions: roles that require a credit check under some other law, law enforcement and investigative jobs, positions needing a security clearance or a bond, and jobs with real signing or transaction authority over a meaningful amount of money.
That part's not optional to check. Assume your state hasn't changed when it actually has, and you've built a compliance problem into every requisition that uses this check.
As of this year, something like a dozen states restrict employment credit checks in some form. California, Illinois, and a few others get named most often, alongside New York's newer statewide rule.
But the restrictions aren't uniform. Some states ban the check outright with narrow carve-outs. Others only limit it for certain job categories, or add extra disclosure steps without banning it entirely.
City and county rules complicate this further. Several major cities layer their own restrictions on top of, or instead of, state law. So checking your state's rule isn't the whole job. You also need to check the city or county where the candidate will actually work, not just where your company is headquartered.
I won't give you a list here and call it final. I said the same thing in an earlier article about arrest records, for the same reason. These laws change mid-year, not just at the start of a legislative session. Verify the current rule with your own counsel or your CRA's compliance team before you rely on anything you read online, including this article.
If a credit check is legal in your state for the role you're filling, most background check companies run it as an add-on to a standard package, not as its own separate product. Pricing and turnaround usually ride along with the rest of the report.
If your state restricts or bans it, ask any provider you're evaluating how they actually handle that. Some CRAs automatically flag or refuse a credit pull in a restricted jurisdiction, which catches a mistake your own team might miss. Ask about this directly during vendor evaluation. It tells you a lot about how seriously they take compliance.
One more thing that doesn't change no matter what state you're in. The FCRA's authorization and disclosure rules apply every time, even in a state where the credit check itself is completely legal. Don't skip that paperwork just because the check is allowed. Allowed and unconditional aren't the same thing.
This comes down to two separate questions, not one. Is a credit check even legal for this role in this state? And once you have the report, does it tell you anything you actually need to make a hiring decision?
Running one just because it's on the standard package, without asking either question first, is how employers end up in trouble.
If you're not sure your current provider handles this correctly, check now, not after a candidate complaint or a state inquiry. All Screeners' matching tool can point you toward CRAs that already build jurisdiction checks into how they run credit pulls. Want a screening program built around this kind of compliance work from the start, instead of assembled piecemeal later? That's what our True Fit consultation is for.