Effective April 18, 2026, a new amendment to New York’s Fair Credit Reporting Act (FCRA) dramatically limits how New York employers can use an applicant’s or employee’s credit history. In general, it will be unlawful for employers to request or use credit reports or any credit-related information in hiring, promotion, compensation, or other employment decisions. This change aligns New York with other states that prohibit credit checks, reflecting research that credit history is a poor predictor of job performance and often contains errors. In plain terms, unless a role meets one of a few narrow exceptions, credit-history screening will be off-limits under New York law.

Employers have long treated credit checks as one way to assess trust or financial responsibility, especially for roles handling money or sensitive data. For example, Universal Background Screening (UBS) offers an Employment Credit Report —a specialized version of a credit report that omits account numbers and doesn’t ding the applicant’s score. In the past, such reports were considered valuable for roles requiring financial integrity. But with New York’s new law, relying on credit-history data is now highly restricted. UBS emphasizes the importance of compliance: as a Professional Background Screening Association (PBSA) – accredited consumer reporting agency, UBS “follows State and Federal Regulations and industry best practices…to protect your organization and assist in your compliance”.

Key Prohibitions and Definitions

Under the amendment, it is now an unlawful discriminatory practice for employers (or their agents) to obtain or use a person’s credit history for employment purposes, unless an exemption applies. “Consumer credit history” is broadly defined as any information about an individual’s credit worthiness, credit standing, credit capacity, or payment history, whether obtained through a credit report, credit score or directly from the individual (including details like number of accounts, late payments, defaults, bankruptcies, judgments, liens, etc.). Even asking about an applicant’s debts or recent credit inquiries would be covered.

In effect, routine credit checks become illegal in almost all cases. The law expressly prohibits employers (and employment agencies or labor unions) from requesting or using any credit report, credit score, or credit-related information in hiring, firing, promotions, pay decisions, or any terms of employment. It applies not just to soliciting reports from credit bureaus, but also to using credit data obtained through other means. In short: unless a role is specifically exempted, credit history cannot influence the employment decision.

Exemptions for Specific Roles

There are very limited exceptions. New York’s law allows credit-history screening only for certain positions or employers explicitly authorized by law. These exemptions generally mirror New York City’s existing law (SCDEA). Specifically, employers may request or use credit history only if:

• Statutory or Regulatory Requirement: The credit check is mandated by state/federal law or a self-regulatory organization (e.g. under the Securities Exchange Act).
• Law Enforcement Roles: The position is for a peace officer, police officer, or other law enforcement/investigative role with a governmental agency.
• High-Trust Public Positions: The role is an appointed position requiring a state background investigation and involving a high degree of public trust.
• Bonded Position: The position must be bonded under state or federal law.
• Security Clearance: The role requires a federal or state security clearance.
• Sensitive Information Access: The position is non-clerical and involves regular access to trade secrets, intelligence, or national security information.
• Financial Authority: The employee has signatory authority over $10,000+ in third-party funds/assets, or a fiduciary role allowing them to enter financial agreements of $10,000+ on the company’s behalf.
• Cybersecurity: The role regularly modifies or manages digital security systems protecting networks or databases.

These are the only scenarios where credit-history checks may continue. Employers should note these exemptions are narrow and role-specific. Just because one employee meets an exemption does not mean an entire employer or industry can use credit data across the board. In practice, few private-sector positions will qualify – so most New York employers will need to remove credit checks from their general screening process.

Implications for Employers

The new law is a paradigm shift for employers in New York. Many organizations in finance, healthcare, staffing, insurance and other sectors have traditionally used credit reports as one part of risk screening. Now they must pivot. Key steps include:

• Review Current Practices: Inventory which roles and processes currently use credit data.
• Map Exemptions: Determine which positions (if any) fall squarely within the statutory exceptions. Any position outside those narrow categories must drop credit-check requirements entirely.
• Update Policies and Forms: Remove credit inquiry questions from applications and screening packages for non-exempt roles. Ensure hiring managers are trained not to ask about or consider credit information.
• Disclose to CRAs: If credit reports will be used for exempt positions, employers should inform Consumer Reporting Agencies (CRAs) of the specific exemption so reports will still be provided for those roles.
• Audit for Compliance: Implement controls or system alerts to prevent inadvertent credit requests. For example, UBS’s screening platform can be configured to disable credit-report ordering except for defined, exempt roles.

Universal Background Screening is prepared to help employers make this transition. As a CRA accredited by PBSA, UBS understands the legal compliance aspects of background checks. They emphasize automated workflows and integration (ATS/HRIS partners) to ensure screenings align with all current regulations. If an employer has uncertainty, UBS can guide them on compliant screening packages and alternative checks (like criminal or credential verifications) to use instead of credit checks.

In fact, the law even restricts CRAs: it prohibits credit bureaus and screening firms from supplying any credit-history information for employment purposes unless a specific exemption applies. This is an unprecedented step, meaning everyone in the compliance chain – from employers to background-check providers – must enforce the new limits. UBS’s compliance materials (e.g. FTC notices, summaries of FCRA rights) and best-practice guidance can help clients adapt. Employers should also consider whether local laws (such as New York City’s SCDEA) impose additional requirements; where laws overlap, the strictest rule applies.

Next Steps

New York’s April 18, 2026 credit-history restriction is a landmark change. It closes the loophole where millions of New Yorkers with imperfect credit could be unfairly screened out of jobs. For employers, compliance will require careful attention to which roles truly need credit data. But ultimately, this shift encourages more equitable hiring practices by focusing on job-relevant criteria.

Employers who act proactively now will mitigate legal risk and streamline their hiring process. For expert guidance, consider partnering with a seasoned background-screening firm like Universal Background Screening. UBS has deep expertise in regulated industries and a strong track record in compliance-focused screening. They can help update your hiring policies, implement role-based screening protocols, and ensure any remaining credit checks are lawfully applied.

Don’t wait: contact Universal Background Screening today to discuss how the new NY credit history law affects your organization. UBS can help you adjust your background check program, train your HR team, and stay on the right side of the law. Contact us for more information and a compliance review.