FAQ - What is the Fair Credit Reporting Act (FCRA)

What is the Fair Credit Reporting Act (FCRA)?

The FCRA is a federal consumer protection statute that regulates consumer reports and ensures the accuracy and security of consumer information. The FCRA applies when an employer uses a third party to prepare the report. An employment background check is one type of consumer report. While the word “credit” is included in the name of the federal law, the FCRA does not only regulate credit reports. Credit reports are one type of consumer report. Most employment background checks do NOT contain credit reports.

Under the FCRA, the “consumer” refers to the subject of a background report. The “End-User” is the party that orders and uses the report to make a decision affecting the consumer (e.g. employment, tenancy, credit, etc.). In the employment context, the end-user is the prospective employer. And the background check company that prepares the report is a type of “consumer reporting agency” or CRA.