The FCRA for small employers: background and credit checks
A short cheat sheet on the federal law behind employment background and credit reports, with the numbers in force in October 2026, the EEOC guidance change and the Illinois rules on top.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 29, 2026.
The Fair Credit Reporting Act (FCRA) is the federal law behind background and credit reports obtained from consumer reporting agencies. The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau can enforce it. Our Mailbox-to-Shredder Screening Run makes it a routine. The official text starts at 15 U.S.C. 1681.
- Any employer, of any size, using an agency report for hiring, promotion, reassignment or retention is covered.
- Before ordering: a stand-alone written disclosure and written permission.
- Before an adverse decision: report copy and summary of rights. After: a notice.
- Willful violations: $100 to $1,000 per consumer, plus punitive damages and fees.
Who it covers
| Group | Covered? | Note |
|---|---|---|
| Employer using an agency report for hiring decisions | Yes, any size | No employee-count test |
| Employer's own first-hand records only | Not a consumer report | Other laws still apply |
The numbers
| Item | Amount or rule | Year or status |
|---|---|---|
| Willful violation | Actual damages or $100 to $1,000 per consumer, plus punitive damages and fees | Current |
| Time to sue | 2 years after discovery, 5 at most after the violation | Current |
| FTC civil penalty | Up to $4,983 per violation, for a knowing pattern or practice | 2025 amount, same in 2026 |
- Disclosure and written permission
- Report copy, summary of rights, a reasonable wait (staff view)
- Written notice, at least 5 business days to reply
- Adverse-action notice
- Free report on request
Source: FCRA, 775 ILCS 5/2-103.1
Our checklist
The Mailbox-to-Shredder Screening Run follows one candidate, form to file.
- Gate: Illinois bars credit checks unless the job fits a listed exception.
- Form: disclosure in its own document, written permission, certification to the agency.
- Pause: report copy and summary of rights go out before any denial (some trucking jobs differ).
- Notice: after the decision, with the agency's details and the free report right.
- Shred: dispose of reports by shredding or erasing.
Mistakes people make
- Burying the permission in the job application.
- Acting before sending the report copy.
- Ordering credit reports for jobs outside the Illinois exceptions.
- Asking about arrests, or about convictions earlier than Illinois or Cook County allow.
Talk to an attorney about a candidate's complaint, a class-action demand or any conviction-based decision.
Common questions
Is there a waiting period after the first notice?
Federal law sets none; FTC staff say a reasonable time. A response time of at least five business days is an [Illinois Human Rights Act](/small-business-laws/illinois/human-rights-act/) and Chicago rule for conviction-based decisions only.
Does the FCRA ban credit or criminal checks?
No. It sets notice and consent steps. Limits come from Illinois, Cook County and Chicago law, and [Title VII](/small-business-laws/federal/title-vii/) still applies.
Can a firm pull a client's credit report?
Only with a permissible purpose, such as the client's written instruction. Willful false pretenses can bring damages, a fine and up to 2 years in prison.
Official sources
- Federal Trade Commission: Using Consumer Reports, what employers need to know
- Cornell Law School, Legal Information Institute: 15 U.S.C. 1681b, permissible purposes
- eCFR: 16 CFR Part 682, Disposal Rule
- U.S. Equal Employment Opportunity Commission: vote to rescind arrest and conviction guidance
- Illinois General Assembly: Employee Credit Privacy Act, 820 ILCS 70/10
Keep reading
Let's talk about your taxes, your business, your plans.
Tell us what you need and we will get back to you quickly. There is no pressure: just a friendly conversation and a clear next step.
4260 Westbrook Dr, Suite 107
Aurora, IL 60504
Monday to Friday, 9:00 am to 5:00 pm, by appointment. Saturday and Sunday by appointment when needed.