by Jeff Sovern
We frequently write here about the Fair Credit Reporting Act because of its application to credit reports. But in fact, the FCRA applies to many non-credit transactions. Those transactions typically take one of two forms. In one form someone uses a credit report for something other than a lending decision. For example, many employers use credit reports to decide whether to hire someone. Thus, yesterday's Times included an article, The Long Shadow of Bad Credit in a Job Search, about how people lose their jobs, default on debts because of the job loss, end up with a bad credit report because of the defaults, and then can't get a new job because of the bad credit reports. Some states have responded by limiting the use of credit reports for employment decisions.
The second type of non-credit transaction arises because the FCRA, notwithstanding its name, applies to "consumer reports," and defines "consumer report" as including many reports that have nothing to do with credit. For example, payday lenders would like to know if someone has committed check fraud and landlords want to know if someone has violated a lease provision in the past. "Specialty consumer reports" provide that information. Because the FCRA applies also to these reports, consumers have the same rights to see the reports and corect errors as they do for credit reports. The CFPB has compiled a list of such specialty consumer report providers here.
UPDATE: Lea Krivinskas Shepard of Loyola of Chicago, has written an article, Toward a Stronger Financial History Antidiscrimination Norm, 53 Boston College Law Review (2012), which discusses the normative debate surrounding employers' use of credit reports.