New York has enacted a significant new restriction on the use of credit history in employment decisions. Effective April 18, 2026, the Legislature has amended the New York Fair Credit Reporting Act to broadly prohibit employers from requesting or using an applicant’s or employee’s consumer credit history.
In a recent webinar, I discussed several common hiring scenarios where employers are likely to run into issues under the new law. As with many compliance risks, the problem is not usually intentional misconduct. It is the continuation of existing practices that no longer align with current legal requirements.
Slides from the presentation are also available here.
Below is a summary of the key scenarios and the compliance issues they illustrate.
“This Is a Finance Role — We Always Run Credit Checks”
Many employers have long used credit checks for positions involving financial responsibilities, such as accounting, payroll, or budgeting roles. The assumption is that access to financial information or company funds justifies reviewing an applicant’s credit history.
The new law disrupts that assumption. Credit history generally cannot be requested or used unless a specific statutory exception applies. Those exceptions are narrower than many employers expect.
For example, certain positions involving authority over significant financial transactions or fiduciary responsibilities may qualify. But routine finance-related roles often will not. The fact that an employee works in accounting or payroll does not, by itself, create an exception.
Employers should therefore avoid applying blanket practices to entire job categories. Instead, any reliance on an exception should be based on a role-specific analysis, with clear documentation supporting why the exception applies.
Background Check Reports That Still Include Credit History Information
Even employers that do not actively “use” credit history may still receive it. Many background check vendors provide standardized reports that include a range of information, sometimes including credit-related data. Under the new law, receiving and reviewing that information can create risk, even if it does not ultimately drive the hiring decision.
This is an area where existing systems create problems. Employers may continue ordering the same reports they have always used, without realizing that those reports now contain prohibited information.
The better approach is to work proactively with vendors to ensure that credit history information is excluded from reports for New York positions unless a valid exception applies. Employers should also consider implementing internal controls so that reports are reviewed for compliance before they reach hiring decision-makers.
Multi-State Hiring Practices
Multi-state employers often rely on uniform hiring processes across jurisdictions. That approach becomes more difficult when state laws impose different restrictions.
The New York law applies to employees working in New York, including remote employees. An employer based outside New York may still be subject to the law if it hires someone who performs work within the state.
Problems arise when employers apply a nationwide process that includes credit checks without accounting for New York-specific limitations. This can be especially complicated when employees relocate or are promoted into roles that involve work in New York.
Employers should consider whether to:
- implement state-specific hiring workflows, or
- adopt a uniform process that complies with the most restrictive applicable laws
Either approach can work, but ignoring the differences creates legal exposure.
Application and Interview Questions About Credit History
Historically, the Fair Credit Reporting Act did not restrict what employers could ask applicants directly. As a result, some employers included questions about financial history in applications or interviews.
The new amendments change that. Employers may not request consumer credit history directly from applicants or employees. This means that questions about bankruptcies, debt, or other financial issues may now violate the law.
These questions are often embedded in:
- legacy application forms
- online hiring platforms
- informal interview practices
Employers should review their hiring materials carefully and ensure that any credit-related inquiries are removed unless a clear exception applies.
Over-Reliance on Vendors
Employers often assume that background check vendors will ensure compliance with applicable laws. That assumption can create risk.
While consumer reporting agencies have their own legal obligations, the employer ultimately controls what information is requested and how it is used. If a vendor provides credit history information and the employer relies on it, the employer may still be responsible for the violation.
For that reason, employers should:
- review vendor agreements and report formats
- confirm what information is actually being provided
- ensure that vendor instructions reflect New York-specific requirements
Simply relying on a vendor’s standard process is not enough.
Informal Access to Financial Information
Not all credit-related information comes from formal background checks.
Hiring managers may learn about an applicant’s financial situation through:
- references
- prior working relationships
- casual conversations
Even if that information is not formally requested, using it in a hiring decision will now violate New York’s FCRA unless an exception applies. Accordingly, employers should ensure that individuals involved in hiring understand that financial history generally should not be considered, even if it becomes known through informal channels.
Why These Hiring Situations Create Problems
These scenarios reflect a broader issue: the law regulates not just discrete actions, but the flow of information in the hiring process.
Employers must now think about:
- what information is requested
- what information is received
- who reviews that information
- how it is used in decision-making
Because hiring systems are often built over time and involve multiple participants, gaps in any of these areas can create compliance issues.
Practical Steps Employers Can Take
Employers can reduce risk under the new law by focusing on a few key areas:
- reviewing applications and interview materials for credit-related inquiries
- confirming that background check reports do not include prohibited information
- working with vendors to align report contents with New York requirements
- evaluating which roles, if any, qualify for statutory exceptions
- training hiring managers to avoid considering financial history
- implementing consistent hiring workflows that account for state-specific requirements
As with many compliance issues, the most effective approach is proactive. Once hiring decisions are made based on prohibited information, it becomes much more difficult to address the issue after the fact.
New York Credit History Ban Frequently Asked Questions
Does the law apply to employers outside New York?
It can. The law generally applies to employees who work in New York, including remote employees. Employers located outside the state may still be subject to the law if they employ individuals performing work in New York.
Are credit checks completely prohibited?
Not entirely. The law includes exceptions for certain positions, such as roles subject to specific legal or regulatory requirements, certain financial authority positions, and some security-related roles. However, these exceptions are relatively narrow and require careful analysis.
Can we still use background checks for criminal history?
Yes, subject to existing federal and state requirements. The new law specifically restricts credit history, but it does not eliminate other types of background screening. Employers must still comply with applicable laws governing the use of criminal history in hiring.
What if we receive credit history information unintentionally?
Receiving the information may not, by itself, create a violation. The risk arises if the employer uses that information to make an employment decision. Employers should implement processes to prevent prohibited information from influencing hiring, compensation, promotion, and disciplinary decisions.
Do we need to update our hiring processes immediately?
Yes. The law requires changes to how employers request, receive, and use information in hiring decisions. Employers should review their practices promptly to ensure compliance.
Final Thoughts
The new New York credit check ban is easy to underestimate. On its surface, it appears to eliminate a specific type of background check. In practice, it requires employers to reassess how hiring information is collected and used more broadly.
For many employers, the greatest risk is not adopting a new policy—it is continuing to follow old processes that were designed under a different legal framework.
Taking the time to review and update those processes now can help avoid more complicated issues later.
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