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EEOC Informal Discussion Letter

The U.S. Equal Employment Opportunity Commission

EEOC Office of Legal Counsel staff members wrote the following informal discussion letter in response to an inquiry from a member of the public. This letter is intended to provide an informal discussion of the noted issue and does not constitute an official opinion of the Commission.

Title VII: Credit Reports



Date: 2/14/2005 10:10:09 AM

Subject: Credit report inquiry


In an e-mail inquiry dated January 21, 2005, you asked, "is it okay for an employer to decline your employment due wholly or partly due to your credit report."

The United States Equal Employment Opportunity Commission (EEOC) enforces Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. (Title VII), which prohibits employment discrimination on the bases of race, sex, color, national origin, and religion. Rejecting applicants on the basis of financial criteria such as poor credit ratings has sometimes been found to disproportionately exclude minority groups. For example, in United States v. City of Chicago, 385 F. Supp. 543, 557 (N.D. Ill. 1974), the court held that a police department could use financial information in background checks of applicants only if using the information does not have an "adverse impact" or is job related and consistent with business necessity. Note that courts will not assume that an employer's exclusion based upon financial criteria disproportionately excluded a protected class. That would have to be proved.

Even if such "adverse impact" on a protected group is proven, Title VII is not violated if the employer can show that requiring the financial criteria is job related and consistent with business necessity. For example, in EEOC v. United Virginia Bank/Seaboard National, 1977 WL 15340, 21 FEP Cases 1392 (E.D. Va. 1977), the court concluded that a bank had a business need to conduct pre-employment credit checks because employees handle large amounts of cash.

We hope that this information is helpful to you. Please note, however, that this e-mail does not constitute an opinion or interpretation of the Commission within the meaning of § 713(b) of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e-12(b).


Dianna B. Johnston
Assistant Legal Counsel

This page was last modified on April 27, 2007.