Can Credit Checks Affect Your Job Search? A Comprehensive Guide

There’s a reason why it’s called personal finance—because money matters are extremely personal. If your application for a job requires a credit check, be aware that society, and some employers in particular, occasionally base their opinions about people’s moral character on how they handle their finances. This means that your credit history may have an impact on your job search, either positively or negatively.

As an illustration, a good credit history is widely regarded as a sign of dependability, self-control, and wise decision-making. On the flipside, money problems can be a major barrier to employment. Problems such as past due payments, evictions, bankruptcies, or fully utilized credit limits may indicate bad credit decisions, irregular expenditures, or an inability to fulfill obligations.

A report by the National Association of Professional Background Screeners and HR. com discovered that 66% of HR professionals verify each applicant’s credit while hiring for certain positions, while 55% of HR professionals use credit or financial checks.

Of course, just because someone has a financial problem doesn’t mean they’re a bad person. However, fair or not, if you’re looking for work, the details in your credit report could make a difference in your chances of getting hired.

What Is a Credit Check?

An employer may perform a credit check as part of a hiring process, which entails reviewing a summary of your credit history to determine how you have managed debt. It includes your payment records, how much money you owe (think credit card debt, mortgages, student loans, etc. ), and your available credit. It doesnt include your credit score.

Why Does an Employer Care About My Credit Score?

“When you apply for a job where you manage a company’s finances, that’s what [employers] look at and where we typically see a credit check,” says Rod Griffin, senior director of public education at Experian, one of the three major credit bureaus. “They want to be sure you’re managing your own well. ”.

It’s not only positions that involve financial or fiduciary responsibilities that might involve a credit check, though. There are other categories of employers that may want to review a candidate’s credit. If you are applying for a job at a company that sells jewelry or other high-end goods, for instance, having a spotless credit report can demonstrate your stability and reduce your likelihood of stealing goods.

Accordingly, you should anticipate a credit check for employment if you’re applying for jobs in law enforcement, government agencies, or any other positions that give you access to private information about other people.

Sometimes, the employer is more interested in spotting application fraud than they are in your financial situation. Griffin claims, “They’ll utilize your credit report as an additional means of confirming that you are who you claim to be.” Work requiring a security clearance or jobs with high operational risk, like government jobs, may make greater use of this.

A less-than-perfect credit report might not automatically disqualify you from the job, but it might be a deciding factor if you’re worried about a background check. Consider this: Which candidate do you believe the employer will choose between two equally qualified applicants, one with impeccable credit and the other who is overextended and heavily in debt?

Before diving into employment and credit laws, let’s dispel a myth that’s been perpetuated online. It’s not true what they say when they say things like “having a bad credit score can prevent you from getting a job.” That’s because employers don’t pull your actual credit scores like a lender might, says Griffin. “You must grant express written permission for [Employers] to access a limited version of your credit report,” he states.

Now for the rules: The main document governing employment credit checks is the federal Fair Credit Reporting Act (FCRA). Here are the highlights:

• The applicant must be informed by the employer that the employment decision may be based in part on the results of the credit check.
• For the employer to perform a credit and background check, written consent is required.
• A copy of “A Summary of Your Rights Under the Fair Credit Reporting Act” and the consumer report that was used to make the decision must be sent to the candidate along with a notice. They should also be given the chance to read the report, clarify any inaccurate information, and refute any negative findings.

Beyond the federal law, there are also currently a handful of states—including California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington—that place limits on when an employer is allowed to use a credit check for employment. Look into the law if you’re being asked about your credit history. The District of Columbia, and the cities of Chicago, New York City, and Philadelphia also have their own restrictions.

Some states allow credit checks for roles that grant access to confidential/proprietary information, security data, or trade secrets. In some other cases, permission is given if the job provides access to expense accounts or corporate cards.

Employers are not allowed to discriminate when it comes to credit checks, so if they are going to check you, they should check everyone applying for that position.

In the event that an employee files a discrimination lawsuit later, the employer must prove there was no discrimination. Consequently, it is imperative for employers to document their policy and provide a consistent application, including the justification for requesting a credit check.

Remember that the employer is required by law to obtain your consent in writing before conducting a credit check on you. This applies to both the time you are a candidate and any future promotion offer that calls for one of these reviews.

Credit check on employment || Could my credit report ruin my chances of getting a job