As the name implies, FCRA governs credit reporting activities.  The Fair Credit Reporting Act also sets guidelines and standards for gathering information about employee applicants. Every ‘consumer report’ which relates to ‘character, general reputation, personal characteristics, and mode of living’ about a person is regulated by the FCRA.  Background screening reports prepared by a consumer reporting agency are included in the reports under the regulation of the FCRA.

There are several good reasons to make background screening a part of your hiring process. If your employees handle the personal data of others, it is critical to know who you hire. If your business involves handling financial or health information for customers, you must comply with electronic data privacy requirements. Not checking on an applicant’s background and whether they are suitable for the job can be very expensive, especially if that employee later causes injury to another person. You will have opened yourself to a negligent hiring lawsuit that could be easily avoided with background screening. Reviewing background and credit is simply a great way to review applicant reliability. Keep in mind, however, that you cannot refuse to hire based simply on the fact that a person has filed bankruptcy.

Beyond the obvious purpose of determining an applicant’s ability to do the job and fit into your company, there are other considerations when preparing your interview questions. Even when asking for information that it is legal to request, you can cross the line into discriminatory (and therefore illegal) questions by the way you ask. It is perfectly acceptable to ask if an applicant is authorized to work in the U.S. It is illegal to ask if they are a U.S. citizen. It’s important to research these issues to be sure you are clear: color, race, religion, sex, birthplace, national origin, disability, age, and family or marital status.