Credit History in Employment: Colorado Laws & Your Rights

The Fair Credit Reporting Act (FCRA), 15 U.S.C. section 1681 et seq., is the primary federal law governing employer use of credit information in hiring. Under the FCRA, employers must obtain written consent before obtaining a consumer report (which includes credit checks) and must provide the applicant or employee with a copy of the report and a summary of their rights before taking adverse action based on that report. The FCRA requires employers to provide individualized notice of any adverse action taken based on the credit report and allows the employee to dispute inaccuracies. The law covers all employers that obtain credit reports, with enforcement by the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). However, the FCRA does not explicitly prohibit the use of credit information in employment decisions—it only mandates disclosure and consent procedures. Remedies under the FCRA include actual damages, statutory damages between $100 and $1,000 per violation, punitive damages for willful violations, and attorney fees. The FCRA has no employer size threshold—it applies to all employers using consumer reports for employment purposes.

State attorneys general can also enforce FCRA violations, and employees can bring private lawsuits in federal or state court. The statute of limitations for FCRA claims is two years from discovery of the violation or five years from when the violation occurred, whichever is earlier. Unlike federal law, the FCRA does not create a blanket prohibition on using credit history in employment decisions; instead, it creates procedural protections that must be followed if credit information is used.

Colorado law provides significantly stronger protections against credit-based employment discrimination than federal law. Under Colorado Revised Statutes section 24-4-402 (part of the Colorado Anti-Discrimination Act), it is unlawful for an employer to refuse to hire, promote, or otherwise adversely treat an individual because of that person's credit history, credit score, or credit rating. This is a substantive prohibition—Colorado does not merely require procedures be followed before using credit information; it prohibits the use of credit status as a basis for employment decisions, subject to narrow exceptions.

Colorado Revised Statutes section 8-2-127 further restricts the use of consumer credit reports in employment decisions. An employer may obtain a consumer credit report for employment purposes only if the position involves: (1) direct access to cash or other valuables, (2) significant financial responsibility, (3) authority to sign checks or financial instruments on behalf of the employer, (4) access to confidential or proprietary information of significant value, or (5) other employment-related positions where the employer has a legitimate business reason to review credit history. The statute specifically requires written notice to the applicant or employee before obtaining a consumer report and written consent. Employers must also notify the individual in writing if an adverse employment decision was made based, in whole or in part, on information contained in a consumer report.

Colorado's law is significantly stronger than federal law because it creates a categorical prohibition on credit discrimination, whereas the FCRA only regulates procedure. Colorado covers all employers with no size threshold. Remedies under Colorado law include actual damages (including emotional distress), lost wages, attorney fees, costs, and expert witness fees. The Colorado Anti-Discrimination Act also allows for administrative remedies through the Colorado Department of Labor and Employment, which can order hiring, reinstatement, back pay, and front pay. Additionally, Colorado courts may award punitive damages in cases of willful or reckless violations, making state remedies potentially more generous than federal FCRA remedies.

Colorado law includes narrow exceptions that permit employers to obtain and use credit information in employment decisions. The primary exception is when the position involves direct access to cash or other valuables, significant financial responsibility, authority to sign checks or financial instruments, access to confidential or proprietary information of significant value, or when the employer has a separate legitimate business reason documented in writing. Employers claiming one of these exceptions must still obtain written consent before obtaining the credit report and must provide written notice if an adverse action is taken based on credit information.

Additionally, the exception requires that the employer demonstrate the position actually involves the cited responsibility—employers cannot simply assert that a position involves financial responsibility without evidence. Federal contractors and positions requiring security clearances may have additional exceptions under federal law, though Colorado law does not explicitly carve out federal contractor positions. Employers defending against credit discrimination claims often argue that the position fell within one of the statutory exceptions, or that the adverse employment action was based on legitimate, non-credit factors. However, Colorado courts have narrowly construed these exceptions, requiring clear documentation that the credit review was truly necessary for the position.

The burden is on the employer to prove that an exception applies and that the credit information was genuinely relied upon for the employment decision. If an employer obtains a credit report without proper written consent, or uses credit information for a position that does not fall within the narrow exceptions, the lack of a legitimate business reason constitutes strong evidence of discrimination. At-will employment does not provide a defense to credit discrimination claims—Colorado permits at-will termination, but that principle does not override statutory protections against discrimination based on protected characteristics or prohibited factors like credit history.

Step 1 — Document the discrimination: Keep records of all communications with the employer regarding your credit, including emails, rejection letters, or conversations about the hiring decision. Save a copy of your credit report if you obtained one, as well as any written notice the employer provided stating that a credit check was obtained or that an adverse decision was based on credit information. Document the date you applied, the position title, when you were rejected or terminated, and any statements the employer made about your credit. Retain any evidence showing the employer obtained a credit report without proper written consent or used credit information for a position that did not genuinely require financial responsibility. Take photographs or screenshots of job postings and job descriptions that may contradict the employer's later claim that the position involved financial responsibility.

Step 2 — Pursue internal complaint process: Request a meeting with the employer's human resources department or manager and state in writing (email is acceptable) that you believe the employment decision was based on your credit history in violation of Colorado law. Ask for a written explanation of the business reasons for the adverse action, specifically requesting documentation showing which statutory exception applied and why. Request that the employer provide copies of any credit report obtained and proof of written consent. Document the date of this request and maintain copies of all correspondence. While an internal complaint process is not required by law, it may help resolve the issue without litigation and demonstrates good faith effort to document the employer's knowledge of your concern.

Step 3 — File a charge with Colorado Department of Labor and Employment: You must file a charge with the Colorado Department of Labor and Employment, Division of Civil Rights, within 180 days of the discriminatory act (this is Colorado's statute of limitations, though federal FCRA claims have a longer 2-5 year window). File online at: https://www.colorado.gov/pac/dhr/file-charge or submit a paper charge to the Division of Civil Rights, 1515 Arapahoe Street, Denver, CO 80202. Include your name, contact information, the employer's name and address, the date of the adverse action, a description of how the credit discrimination occurred, and names of witnesses if available. Specify which Colorado statute was violated (section 24-4-402 or section 8-2-127) and request the remedies you seek (reinstatement, back pay, damages, attorney fees). The agency may also investigate FCRA violations if a credit report was obtained improperly.

Step 4 — The investigation process: After you file a charge, the Colorado Department of Labor and Employment will assign an investigator to your case. The agency will contact the employer and request documentation, including the credit report obtained, proof of written consent, written notice provided to you, and the employer's business justification for obtaining the report. The employer will be asked to explain the legitimate business reason for the credit check and to provide evidence that the position fell within one of the statutory exceptions. The investigator will interview you and may interview witnesses. This investigation typically takes 60-120 days but can take longer if the case is complex. You will receive a notice of findings detailing whether the agency found reasonable cause to believe discrimination occurred. If reasonable cause is found, the agency will attempt to conciliate between you and the employer. If conciliation fails, the agency will issue a finding and may pursue administrative remedies or refer the case for litigation.

Step 5 — Consult an employment attorney: Consult with an employment discrimination attorney in Colorado as soon as possible after the discriminatory act, or before filing your charge with the state agency. An experienced employment attorney can review whether the employer had a legitimate business reason for the credit check, evaluate the strength of your claim, and advise you on remedies you may be entitled to (back pay, front pay, damages, attorney fees). The attorney can also help determine whether to pursue state-level administrative remedies, file a separate FCRA claim in federal court for procedural violations, or pursue both. Many employment attorneys work on contingency in discrimination cases, meaning they advance costs and are paid from any settlement or judgment. An attorney can also negotiate with the employer on your behalf and represent you at hearings before the Colorado Department of Labor and Employment or in court if litigation becomes necessary.