What to Know About Employer Credit Checks

Published on Feb 18, 2015 11:21 am

You know that blemishes on your credit report can make it difficult to get a loan. Could they also affect your ability to get a job? Nearly half of employers say they conduct credit checks on job candidates, according to the Society for Human Resource Management (SHRM). They look at candidates’ credit with an eye toward decreasing theft, minimizing embezzlement and mitigating legal liability for negligent hiring, a survey by SHRM found.

If you’re job-hunting, here are some facts about employer credit checks that you may find useful:

  • The Fair Credit Reporting Act (FCRA) mandates that employers can’t look at your credit report without your written permission. You have the right to decline a credit check by a prospective employer, and may want to ask the employer what effect declining may have on your candidacy.
  • Currently, 11 states have legislation in place that governs credit checks by employers. You can find a list of the legislation and brief summaries on the website of the National Conference of State Legislatures.
  • Federal legislation on employer credit checks is pending in both the House of Representatives and the Senate.
  • Employers who look at your credit report will see the same information a potential lender would, including open accounts, payment history, credit use and any negative entries, such as delinquencies, bankruptcies or judgments.
  • The majority of employers (58 percent) who look at applicant credit reports do so after making a contingent job offer, according to the SHRM survey. And 64 percent give candidates the opportunity to explain negative information on their credit reports. If you’re concerned that something on your credit report may negatively influence an employer’s hiring decision, you can ask for the chance to discuss the information.

As you might expect, the majority of employers who conduct credit checks on applicants are doing so for jobs where the employee might have financial responsibility, access to money or very sensitive information, or interaction with people who might be considered financially vulnerable. If you feel your credit history isn’t relevant to the position you’re applying for, you could ask the employer to reconsider a credit check.

If you’re concerned about the potential impact a credit check might have on your job search, you may consider checking your credit report before an employer asks to do so. Knowing what’s on your credit report – good or bad – can be valuable. It can also help you catch any possible mistakes, inaccuracies or signs of identity theft and address them before a potential employer might see them. Checking your credit report regularly and knowing the factors that impact your score can help you avoid surprises.

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This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from ConsumerInfo.com, Inc., an Experian company.

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