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2 min read

U.S. House of Representatives Passes FCRA-Amending Bill: The Comprehensive CREDIT Act of 2020

On January 29, 2020, the United States House of Representatives passed the “Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and Transparency (CREDIT) Act of 2020” (the “Act”).

The Act contains a number of provisions that could amend the Fair Credit Reporting Act (“FCRA”) in drastic ways.

Importantly, for employers, one of the Act’s sections places restrictions on when, or if, an employer can perform a credit check on their applicants and employees for employment purposes. The Act’s provisions state:

(A) IN GENERAL. —A person may use a consumer report for employment purposes with respect to any consumer in which any information contained in the report bears on the consumer’s creditworthiness, credit standing, or credit capacity only if—

(i) (I) the person is required to obtain the report by a Federal, State, or local law or regulation;
(II) the information contained in the report is being used with respect to a national security investigation (as defined in paragraph (4)(D)); or
(III) the report is necessary for a background check or related investigation of financial information that is required by a Federal, State, or local law or regulation;

(ii) none of the cost associated with obtaining the consumer report will be passed on to the consumer to whom the report relates; and

(iii) the information contained in the consumer report will not be disclosed to any other person other than—
(I) in an aggregate format that protects a consumer’s personally identifiable information; or
(II) as may be necessary to comply with any applicable Federal, State, or local equal employment opportunity law or regulation.

The Act would also require employers to provide additional, specific disclosures if a credit report is used by a person for employment purposes:

(B) DISCLOSURES. —A person who procures, or causes to be procured, a consumer report described in subparagraph (A) for employment purposes shall, in the disclosure made pursuant to paragraph (2), include—

(i) an explanation that a consumer report is being obtained for employment purposes; (ii) the reasons for obtaining such a report; and (iii) the citation to the applicable Federal, State, or local law or regulation described in subparagraph (A)(i)(I).

Furthermore, the Act creates particular requirements if adverse action is taken based on the information in a credit report:

(C) ADVERSE ACTIONS.—In using a consumer report described in subparagraph (A) for employment purposes and before taking an adverse action based in whole or in part on the report, the person intending to take such adverse action shall, in addition to the information described in paragraph (3), provide to the consumer to whom the report relates—

(i) the name, address, and telephone number of the consumer reporting agency that furnished the report (including, for a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis, a toll-free telephone number established by such agency); (ii) the date on which the report was furnished; and (iii) the specific factors from the report upon which the adverse action (as defined in section 603(k)(1)(B)(ii)) was based.

The full text of the Act and its current status can be found on Congress’ website. These proposed amendments to the FCRA are only a portion of the Act. You may want to discuss the Act with your attorney to determine if, or how, any provisions might impact you if the Act does become law.

It is important to note that the Comprehensive CREDIT Act of 2020 has not yet become law. Verified Credentials will continue to monitor the Act and will provide updates as they become available.

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