Credit History in Employment: Pennsylvania Laws & Your Rights

The Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., is the primary federal law governing employer use of credit reports. Under FCRA § 1681b(b)(2)(A), employers must obtain clear written authorization from a job applicant or employee before obtaining a consumer credit report from a third-party consumer reporting agency. The law applies to all employers who use credit reports in hiring, promotion, or termination decisions.

FCRA § 1681a(h) defines a consumer report broadly to include credit history, credit score, payment history, and other financial information compiled by a consumer reporting agency. Employers covered by FCRA include all private employers, state and local governments, and federal agencies.

If an employer takes adverse action based in whole or in part on information in a credit report—such as rejecting an application, denying promotion, or terminating employment—the employer must provide the employee with a written adverse action notice under FCRA § 1681g(a). This notice must include the name and contact information of the consumer reporting agency, a statement that the agency was not involved in the decision, and notification of the employee's right to dispute the report's accuracy.

The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) enforce the FCRA. Additionally, the Equal Employment Opportunity Commission (EEOC) enforces Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, which prohibits employment discrimination. While credit checks themselves are lawful under federal law, using credit reports in a way that has a disparate impact on a protected class (race, color, religion, sex, national origin) without job-related justification violates Title VII.

Pennsylvania does not have a state-specific law that restricts or prohibits employers from checking employee or applicant credit histories. The Pennsylvania Fair Credit Extension Uniformity Act, 73 P.S. § 2181 et seq., addresses credit reporting and consumer protection but does not explicitly limit employer access to credit reports or establish procedural requirements beyond those in the FCRA.

Because Pennsylvania lacks state-level credit-check restrictions, federal FCRA requirements are the primary legal standard employers must follow when obtaining and using credit reports. This means Pennsylvania employers have broader latitude to use credit history in hiring and employment decisions than employers in states like California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, New Mexico, New York, Oregon, Vermont, and Washington, which have enacted state laws restricting or prohibiting pre-hire credit checks or limiting when employers can pull credit reports.

Under Pennsylvania law, employers are not required to provide pre-authorization notice or to justify credit checks to applicants or employees. However, if an employer obtains a consumer credit report through a consumer reporting agency, the federal FCRA requirements still apply: written authorization must be obtained, and an adverse action notice must be provided if the credit report is used in a negative employment decision.

Pennsylvania employers must still comply with Title VII anti-discrimination laws, the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), and other federal protections. If an employer's credit-check policy has a disparate impact on a protected class or is used as a pretext for discrimination, it is illegal under federal law regardless of Pennsylvania's silence on the topic.

Employees in Pennsylvania who believe credit checks were used unlawfully have recourse under federal FCRA and anti-discrimination laws, not under state law.

Employers in Pennsylvania may legally check credit history without many of the restrictions present in other states. FCRA authorizes employer credit checks when third-party consumer reporting agencies are involved, and Pennsylvania law does not narrow this authorization.

However, several important exceptions and limitations apply:

First, if the employer pulls credit information directly from public records (court filings, bankruptcy records) without using a consumer reporting agency, FCRA authorization requirements may not apply, but the employer must still ensure the use does not violate Title VII or other anti-discrimination laws. Second, soft credit inquiries that do not constitute a consumer report under FCRA—such as obtaining information directly from a credit card company or bank about an applicant's account status—may fall outside FCRA's scope, though employer obligations remain under anti-discrimination law.

Third, employers cannot use credit checks as a pretext for discrimination. Even though Pennsylvania permits credit checks, if the employer's credit policy is applied selectively based on race, color, religion, sex, national origin, age, disability, or other protected status, the practice is illegal under Title VII, ADEA, or ADA. For example, if an employer checks credit only for Black applicants but not white applicants, or only for older workers but not younger workers, that disparate treatment is prohibited.

Fourth, employers must follow FCRA procedures: written authorization, adverse action notice with agency contact information, and the opportunity for employees to dispute the accuracy of the report. Failure to provide notice or to obtain authorization can result in liability even if the credit check itself is legal in Pennsylvania.

Fifth, if a credit report contains an inaccuracy—such as a debt or bankruptcy that does not belong to the employee—the employee has the right to dispute it under FCRA § 1681i. The employer cannot take final adverse action if the dispute is pending.

Sixth, bankruptcy discharge may limit the relevance of credit history. Under FCRA § 1681c(a)(1), a bankruptcy filing cannot be reported after 10 years; older bankruptcies must be excluded from reports. Employers cannot use reported bankruptcy as a basis for adverse action if it exceeds the reporting period.

Step 1: Document the credit inquiry and adverse action. Keep copies of any consent forms you signed allowing an employer to pull your credit report. Save the adverse action notice if the employer denies hire, promotion, or termination citing credit issues. Record the date the employer requested your credit information and the date of any negative employment decision. Take screenshots of any emails or written communications from the employer referencing your credit. Note the name of the consumer reporting agency if listed on the adverse action notice.

Step 2: Request a copy of your credit report from the consumer reporting agency. The adverse action notice must include the agency's name, address, and phone number. Contact the agency and request a free copy of your report under FCRA § 1681j. Review the report for inaccuracies, fraudulent accounts, or outdated information. Document any errors (wrong accounts, incorrect payment history, identity theft). Dispute inaccurate items with the agency in writing; the agency must investigate within 30 days under FCRA § 1681i.

Step 3: Determine whether to file a federal FCRA complaint or a Title VII discrimination complaint. If the employer failed to obtain written authorization before pulling your report, did not provide an adverse action notice, or pulled a report that contained inaccurate information, you have an FCRA claim. File a complaint with the Consumer Financial Protection Bureau (CFPB) at www.consumerfinance.gov/complaint or with the Federal Trade Commission (FTC) at www.reportfraud.ftc.gov. Provide copies of the authorization form (or lack thereof), adverse action notice, credit report, and proof of the employment decision. If you believe the credit check was used as a pretext for discrimination based on race, color, religion, sex, national origin, age, or disability, file a charge with the EEOC at www.eeoc.gov or contact the EEOC's Philadelphia District Office at (215) 440-2600. Provide documentation of the employer's credit-check policy and evidence that similarly situated employees of different protected classes were treated differently.

Step 4: Understand the investigation process. The CFPB and FTC will review your complaint for FCRA violations. If the complaint shows a pattern of unauthorized credit pulls or failure to provide adverse action notices, the agency may investigate the employer and issue fines. EEOC investigations typically take 180 to 365 days. The EEOC investigator will request documents from the employer (credit check authorization forms, adverse action notices, hiring records, and evidence of how the employer applied its credit-check policy across employee groups). You may be asked to provide a detailed statement and supporting evidence of discrimination. After investigation, the EEOC will issue a determination letter stating whether probable cause exists. If probable cause is found, you may pursue a lawsuit or participate in mediation.

Step 5: Consult an employment attorney if you have evidence of FCRA violations or discrimination. Contact a lawyer who specializes in employment law or consumer protection law. Many offer free or low-cost initial consultations. An attorney can review the employer's authorization procedures, advise whether to file a private FCRA lawsuit under 15 U.S.C. § 1681p (which allows recovery of statutory damages up to $1,000 per violation plus actual damages and attorney's fees), and represent you in settlement negotiations or litigation. If discrimination is involved, an employment lawyer can help pursue a Title VII claim seeking back pay, front pay, compensatory damages, and attorney's fees.