New York has enacted a law banning most employers from using credit reports in hiring, effective April 18, 2026, making it the 11th state to implement such restrictions. This move addresses concerns that credit checks can unfairly disadvantage job applicants and reflects a broader shift towards limiting financial history in employment decisions.
The new legislation, signed by Governor Kathy Hochul in late 2025, amends the New York Fair Credit Reporting Act to prohibit employers from requesting or using consumer credit history for employment purposes. Similar laws are already in place in California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington, as well as in several cities including New York City.
There are specific exemptions to the ban, primarily for positions where credit checks are deemed necessary for security or fiduciary reasons. These include law enforcement roles, jobs requiring security clearances, positions with access to trade secrets or national security information, and roles involving control over significant funds or assets. Employers must ensure that any credit checks conducted fall within these narrow exceptions and comply with both state and federal regulations.
The rationale behind credit checks in hiring has traditionally been that individuals with poor credit or high debt might be more prone to theft, fraud, or embezzlement, especially in financial or sensitive roles. However, critics argue that credit history is often unrelated to job performance and can perpetuate discrimination, particularly against low-income individuals or those with medical or student loan debts.
For job seekers, it is recommended to regularly check credit reports from the three major bureaus—Equifax, Experian, and TransUnion—for inaccuracies, which can be obtained for free through annualcreditreport.com. If a job offer is contingent on a background check, transparency about any negative credit history is advised, as employers are required to provide candidates with a copy of the report and an opportunity to dispute errors under the Fair Credit Reporting Act.
Legal experts note that the New York law may have nationwide implications, as it could apply to New York residents applying for jobs in other states. Employers, especially national ones, are increasingly reconsidering the necessity of credit checks due to the growing patchwork of state and local restrictions, with some opting to eliminate them altogether to streamline hiring practices.
Failure to comply with the new ban can result in significant liabilities for employers, including compensatory damages, attorney’s fees, and punitive damages for willful violations. The New York State Division of Human Rights will monitor the use of exemptions and report findings to the legislature, ensuring enforcement and accountability.
As more jurisdictions restrict credit checks, the trend signals a move towards more equitable hiring practices, focusing on qualifications and experience rather than financial history. Job seekers should stay informed about their rights, while employers must update policies and training to adhere to the evolving legal landscape.
