New York State limits employers’ use of credit reports in employment decisions

On December 19, 2025, Governor Kathy Hochul signed amendments to New York State’s Fair Credit Reporting Act (the Amendments) to restrict an employer’s use of credit history for employment purposes. The Amendments, effective April 18, 2026 with limited exceptions, now make New York the eleventh state to ban the use of consumer credit history and align with the restrictions already in place within New York City.  

Statutory restrictions on employers and consumer reporting agencies

Under the Amendments, employers may not use an applicant’s or employee’s “consumer credit history” for hiring, compensation, or other terms and conditions of employment. “Consumer credit history” includes (i) information provided in consumer credit reports or credit scores; and (ii) applicant-provided details about credit accounts, bankruptcies, judgments, or liens. 

The Amendments also take credit reporting restrictions further by prohibiting consumer reporting agencies from furnishing reports to employers that include an applicant’s or employee’s consumer creditworthiness, standing, capacity, or history based on a consumer’s financial transactions, for employment purposes.  

Exceptions

Though the Amendments broadly define “consumer credit history,” they recognize specific exceptions where credit history may still be used for employment purposes. Specifically, the Amendments do not apply to: 

• Employers required to use an individual’s credit history under state or federal law (or a securities self-regulatory organization under Exchange Act §3(a)(26))

• Employers obtaining credit information pursuant to a lawful subpoena, court order, or law-enforcement investigation

• Applicants for police or peace officers, and careers with investigative or law enforcement functions

• Positions subject to background investigation by a state agency where the role is an appointed position with a high degree of public trust

• Roles required to be bonded under state or federal law 

• Occupations requiring security clearance 

• Non-clerical opportunities with regular access to trade secrets, intelligence, or national security information

• Jobs with (a) signatory authority over third-party funds or assets of $10,000 or more, or (b) fiduciary authority to enter financial agreements of $10,000 or more on the employer’s behalf 

• Professionals with regular duties allowing modification of digital security systems

State agencies and courts are expected to strictly construe these narrowly-defined exceptions. 

Next steps for employers

Before the Amendments become effective, employers should update hiring policies, authorization forms, and adverse action templates to remove impermissible credit inquiries. Employers should then train recruiters and managers in these new limits and exceptions to these restrictions. 

Employers should also audit all positions to determine whether they fall under one or more exceptions that the Amendments outline. If employers determine that certain positions do not fit into any exception, employers should cease requesting or using consumer credit history for employment purposes and ensure that background vendors are not supplying prohibited credit information for employment purposes. 

If employers determine that certain positions fit into one or more exceptions, employers should document the rationale where used and restrict credit checks to those roles, criteria, and purposes expressly permitted.