The short answer is that a typical background check does not reveal your credit score. However, there are some exceptions to this rule. You may need to provide written consent for landlords or employers to obtain a separate credit check in certain situations.
Therefore, even though most employers won’t be able to see your credit score, your credit history may still have an effect on your application. This is due to the fact that a modified credit report—which is frequently a part of background checks—can disclose a great deal of the same data that goes into determining your credit score.
What you should know about credit scores and background checks is broken down here:
What is a background check?
A background check is an investigation that provides pertinent details about your financial, criminal, and personal histories. Landlords and employers typically request these reports because they want to be sure they’re making a safe choice before entrusting someone with their property or confidential information.
What’s on your background check?
The specific items detailed on your background check vary by state and by which investigative firm your screener chooses. However, most reveal criminal history, driving records, work history and authorization, and some companies may even include information from your social media presence.
What about my credit history?
Background checks might not reveal your credit score, but they might reveal your financial history, which can provide a prospective employer or landlord with many of the same details. This financial history includes:
- Loan and repayment history
- Current balances of existing credit accounts
- Bankruptcy filings
- Reports of accounts going into collections debt
In other words, even though they won’t see your exact credit score, the screener will see a modified credit report, which will give them a good idea of your financial situation. If you have a bad financial track record that includes things like delinquent accounts, late payments, and bankruptcies, it could keep you from getting that new job or condo.
Why is my credit score important?
If landlords and employers don’t necessarily need your credit score to reject you, why is it so important?
Credit scores can be the key to obtaining a mortgage, a credit card, or an auto or personal loan, and they can help you get better rates on all of them. Insurance companies may also consider your credit score before they issue a quote for coverage. (And, as we mentioned above, landlords do sometimes request credit scores specifically.)
A higher credit score means lower rates, which makes it easier to stay on top of your payments.
What if I don’t agree to a background check?
Your permission is required for an employer or landlord to run a background check, and you can always simply refuse to give it.
But if you do, your would-be screener has the right to refuse to give you that job or lease. However, there are laws in place that determine exactly how extensive a background check may be and what information can be included. These laws, which vary by state, are intended to avoid potential discrimination.
When a background check could include a credit check
Although the vast majority of background checks don’t include a credit check, it’s possible you may run into an exception—for example, if you’re applying for a job in the financial industry or any job where you might handle a lot of money.
But it wouldn’t happen without your consent—screeners would need to specifically note their intention to check your credit, in addition to doing a general background check.
This is one more reason it’s so critical to take advantage of your free annual credit report. By keeping an eye on your file, you’ll be able to get ahead of any false or fraudulent information.
How to improve your credit history and score
Clearly, your credit history and your score can both have significant impacts on your life. If you want to own a house, buy a car, or even just get a new job, you want a positive credit report in your corner.
Fortunately, if your credit isn’t quite where you’d like it to be, there are steps you can take to repair it, though it does take discipline and patience.
Here are a few tips to get you started:
- Check your credit report for errors: The first step to improving your credit is to make sure your credit report is accurate. You can get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year at AnnualCreditReport.com. Review your reports carefully and dispute any errors you find.
- Pay your bills on time: This is the single most important factor in your credit score. Make sure you pay all of your bills on time, every time. Even a single late payment can hurt your credit score.
- Keep your credit utilization low: Your credit utilization ratio is the amount of credit you’re using compared to your total available credit. Aim to keep your credit utilization below 30%.
- Don’t apply for too much credit: Every time you apply for new credit, it results in a hard inquiry on your credit report. Too many hard inquiries in a short period of time can lower your credit score.
- Become an authorized user on a credit card with good credit: If you have a friend or family member with good credit, ask if you can become an authorized user on their credit card. This will help you build your credit history without having to open a new account.
By following these tips, you can improve your credit history and score, which will make it easier to get approved for loans, credit cards, and other forms of credit in the future.
Does an employer credit check hurt your credit score?
Your credit score wont be affected by a potential employer conducting a credit check on you.
“An employment inquiry is treated like a soft inquiry,” Ulzheimer says. “Not visible to other parties (other than you) and not considered in credit scoring systems. “.
According to the 2018 HR. Employers, as opposed to lenders, normally evaluate candidates based on their long-term credit history, which spans four to seven years. This implies that even if your most recent credit history is good, an employer may still inquire about a significant disparity from a few years ago.
Our top picks of timely offers from our partners
Applying for a new job means perfecting your resume, writing a cover letter and preparing for an interview. But theres something else you should work on before submitting your next job application: your credit.
According to a 2018 HR.com report sponsored by the National Association of Background Screeners (NABS), 95% of companies conduct some type of background check on potential employees — 16% pull credit or financial checks on all job candidates and almost one-third do credit checks on some candidates.
Unlike lenders, your next employer cannot view your credit score or credit account numbers, but they may look at your credit history. This is one of the most common myths about credit scores. But its worth knowing what employers can see when they do a credit check.
What Does an Employment Background Check Include?
FAQ
Can you be denied a job because of bad credit?
Can my credit score affect my job?
Can you lose a job offer due to bad credit?
Does an employer background check affect your credit score?
The good news is an employer background credit check won’t affect your credit or FICO score at all. Why? It’s considered a soft inquiry, which pulls most of your financial information for data purposes as opposed to a hard inquiry, which can take points off your score.
Does my credit score show up on a background check?
The short answer is no, your credit score doesn’t usually show up on a standard background check — though sometimes landlords may submit a request for a credit check separately. (You’ll have to give your written permission for them to do so.) But your credit history could still affect your application.
What does a background check look for in a credit report?
The common purpose behind investigating your credit in a background check is to investigate a prospective candidate for a position of responsibility, such as for employment, tenancy, government service or perhaps a voluntary project. This check may be run to look for indicators that you have handled responsibility well in the past.
Does a job background check include a credit report?
Sometimes employers approach background checks in different ways. In some cases, credit reports are included. A job background check may include a credit check in certain industries, such as banking and security. The size of the company can be a factor, too: Large corporations are more likely to conduct a credit check than a small family business.