Does a Creditor Have the Right to Contact My Employer for Income Verification?

You may be eager to keep your financial life private in the workplace, but if you're either out for a loan or behind on your payments, that may not always be possible. Federal law gives creditors the right to contact your employers to confirm the income information you have presented to them is correct.

Income Verification

Creditors want to know your financial picture when you apply for a loan or when they are trying to collect a debt. This information helps them judge your ability to meet the loan payments before they extend credit to you, and if you default on a debt, it allows them to judge your financial outlook. Federal law permits creditors to call your employer to verify your income.

Other Information

Income information is not the only thing creditors can check with your employer. They are also allowed to ask for your home address and phone number. If you default on a debt, creditors are allowed to ask this information of your friends, neighbors, co-workers and family members as well.

Preventing Access

In the case of a loan application, it is usually in your best interest to let the creditor verify your income with your employer. In some cases, you may even be denied your loan without your employer's information.

In the case of a debt, if you don't want your creditors calling your employer and can't make payment arrangements, the easiest way to block access is to hire a debt attorney to represent you. Once you have an attorney, the collection agency must direct all questions to them rather than third parties. You state's bar association can point you in the direction of a qualified attorney.

Debt Collection Harassment

Although creditors can contact your employer to verify income and other information, there are many things they can't do, especially in the case of debt collection. They cannot discuss your debt with any third party, and they cannot ask your employer to urge you to pay your debt. They can only contact your employer one time to verify your income, though they can call your employer a second time if they win a court judgment against you and want your wages garnished.

If your creditors overstep these boundaries, report them to your state attorney general's office or to the Federal Trade Commission.