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Misconceptions of the Fair Credit Reporting Act

The first day of a new job is undoubtedly as nerve-wracking as it is exciting—while you are happy and perhaps even somewhat relieved you have landed a new job with promising opportunity, you are likely also wondering how you will fit in to the company’s needs and overall culture.
However, most people don’t talk about the trepidation that a company must feel after hiring a new employee. Onboarding a new worker is a highly risky operation, one that takes a sizeable amount of time, effort, and resources to execute. And even then, there’s always the chance that all of that work in trying to find the perfect candidate is for naught; sometimes an exceptional resume and work experience simply aren’t enough.
With all of the headache and back-breaking work that goes into the hiring process, some things should be easy, seamless, and inexpensive for an employer to locate their next talent. Fortunately, one step of the process, the background check, is a quick and effective insight into an individual’s moral, ethical, and societal tendencies and is an easy way to weed out undesirable prospects.
As easy as a background check is on paper, there are a few misconceptions and stigmas behind the process that skew public opinion. But what some people don’t know is that there’s actually a governing standard that protects them from being misrepresented in the background screening process. Let’s talk briefly about that law as well as a few myths behind it.
What is FCRA?
The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection of consumer’s credit information and access to their credit reports. It was passed in the 1970s to ensure fairness, accuracy and privacy of personal information that are filed with CRAs. The FCRA rules how a consumer’s credit is obtained, how long it’s kept, and the way it is able to be shared. In it its most basic form, the FCRA is designed to protect the integrity and privacy of the applicant’s credit and private information.
Essentially, the FCRA regulates credit reporting agencies, who are the most prominent users of consumer reports and furnishers of consumer information for employers. There are two federal agencies in charge of overseeing and being sure to enforce the FCRA—the FTC (Federal Trade Commission) and the CFPB (Consumer Financial Protection Bureau). Consumers have many rights under the FCRA, but they may have even more rights when it comes to their consumer reports.
Common Misconceptions of the FCRA:
1. We don’t run credit reports on applicants, so the FCRA doesn’t apply to our applicant screening practices? 
False! If there is any third-party company used to provide the services, you are obtaining a consumer report and are obligated to abide by the laws of the FCRA. Even if you are in an “employ at will” state, itt does not override the applicant’s rights under the FCRA.
2. Consumers can sue a creditor for reporting false information on the credit report?
This is moderately true, but certain steps must be completed first. The consumer first needs to dispute directly to the CRA. The CRA then must communicate that within 5 days and report the results back to the consumer within 30 days. If the information is still not accurate, then they may have the right to pursue the creditor. Again, this applies only if the creditor is in fact guilty and the consumer’s character is damaged by the reporting of the account.
3. As an applicant, I am powerless in the results of my credit report.
False! In fact, this is far from the truth. The FCRA gives applicants a lot of power. For example, a background check cannot even be carried out without the permission of the applicant. Two, if the applicant is to receive a “no hire” decision, the employer must explain to them in writing on why the decision was taken. Then the applicant can request a copy of the report and challenge any of the information.
4. An employer can include a simple check box informing the applicant they’re going to be screened? 
False! The FCRA says that the background check consent form must be a separate “clear and conspicuous” disclosure that has identifying information as to what is being run and must be directly relevant to the hiring decision.
TazWorks: the clear choice in background screening solutions
Credit reporting and background screening, while a rudimentary part of the hiring process for most businesses, can be a web of rules and regulations to understand and abide by. And when you consider you are handling and storing people’s sensitive information, more concerns about safety and security can arise.
By utilizing a background screening platform like TazWorks, you are taking a huge portion of the tedious work of background screening off of your hands. Gain access to a suite of the best screening tools in the business, benefit from hundreds of partner integrations, and unearth invaluable insights from our business intelligence and reporting tools. All of this is housed inside our proprietary TazCloud solution, so customizing your platform to your specific needs is a breeze.
The hiring process is a tense situation for all parties. For businesses, it’s worth the small investment to run background checks, possibly saving thousands, the company profit and the company’s reputation. And for consumers who are skeptical about having a background check run, know that there are regulations like the FCRA in place to help protect your privacy and rights as an individual. That way you can place all of your focus on preparing yourself for that first day of work.

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