Under the Fair Credit Reporting Act (FCRA), negative items such as bankruptcies, foreclosures, judgments, late payments and liens may be legally removed when the credit bureaus are unable to verify such incorrect, obsolete information.
Credit reporting and other investigative agencies may also provide background financial and personal information for insurance purposes or to an employer about an employee or applicant for a permissible "employment purpose". A permissible employment purpose is the evaluation of an individual for employment, promotion or retention.
When employers hire a third party to conduct a background check, or obtain reports from outside agencies they are subject to the Fair Credit Reporting Act (FCRA). The FCRA distinguishes between two forms of reports, consumer reports and investigative consumer reports. A consumer report includes credit checks, overall indebtedness, addresses of record, etc.
Investigative consumer reports provide in-depth information about an individual's character, general reputation, personal characteristics; mode of living, etc. Due to the more "intrusive" nature of investigative consumer reports, the Fair Credit Reporting Act requires employers who request this type of report to comply with additional notice and disclosure requirements.
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