Employers can legally use many aspects of your life to decide whether or not to employ you. Your criminal history, employment history and education are some of the main things employers check to determine to hire you. They can interview you, drug test you, and ask for references.
Many job seekers believe companies check their credit scores and factor those into the hiring decision. Those who have had past credit missteps such as bankruptcies, foreclosures, or collections worry these issues may decrease their scores to the point they won’t get the job.
Let’s dive into your credit score and if it can stop you from getting your next job.
1. Employers should not use your credit score as a hiring measure.
Credit scores are predictors of your future bill paying performance, and offer important insight into decisions like extending mortgage credit, credit card limits, and even insurance rates. They hold no bearing over whether or not you will be late for work, call in sick, steal, make errors, be unproductive, or anything else that constitutes a “bad” employee. Because of this, credit scores are not to be used in employment decisions.
So why do people think that mediocre or dismal credit scores will be held against them in their job search? Because…
2. Items on your credit report CAN be used as screening tools.
While the actual credit score is not used in employment decisions, your credit report information can indeed be tapped by potential employers.
The way a person manages their financial life gives insight into their level of responsibility. Consumers paying their bills on time, keeping their balances low, and avoiding public records such as liens may be viewed more favorably. On the flip side, those who pay the debts habitually late, keep high credit card balances, and have recent collections and judgments could be viewed negatively.
So, while your credit scores have no bearing on your chances of being hired, your credit history might.
3. Promotions and security clearance can depend on your credit history.
In addition to hiring decisions, companies may choose to use a person’s credit history as a tool to decide on important decisions after bringing a person on as an employee. In some cases, a credit report is pulled to periodically make sure an employee is still maintaining good financial management practices. Potential promotions may spur a credit history check, for example.
People who apply for certain security clearance within their employment perimeters may also face a credit check.
Generally, when reviewing a current employee, businesses will use a credit report as only one piece of the investigation. Accompanying criminal checks, drug screening, references, and past performance review reports will also factor into the ultimate decision.
4. Not every job warrants a credit check.
Depending on the position, a credit report may or may not be a relevant piece of information. Jobs that don’t deal directly with money or inventory, such as a janitor, forklift driver, or office worker most likely don’t require a credit history review. Positions that require handling money like bank tellers would make a credit report review relevant, as would jobs where large amounts of expensive inventory was around, like jewelry story associates.
It’s frowned upon by current hiring regulators like the Equal Employment Opportunity Commission (EEOC) for employers to pull a credit report unless a person’s credit history is relevant in some way to the position they are trying to land. So, depending on the type of job you want, you may not even need to deal with having your credit report pulled.
5. Employers must abide by rules when screening applicants for a job.
Consumers don’t need to worry that their credit history will be used to screen them for employment without them knowing about it. When a company is going to pull your credit report and use it in the hiring decision, they must notify you and have you give your consent. Most will ask for written authorization that you have agreed to let them pull your credit report. This is good news, because you can be prepared for the fact that they will be looking at your credit report.
In addition, if an employer decides not to hire you based on information found during your credit check, they are required to notify you. If the information is erroneous, if there were numerous public records showing up on your credit history that were someone else’s, for example, you will be given a chance to dispute the information.
How can you keep your credit report from ruining your chances of landing a job?
While credit scores are not factored into the process of determining who to hire, employers can use your credit report to make hiring decisions. If you are planning to look for a job in the near future, here are some good tips:
- Pull your credit. Eliminate the chances of you losing out on a job because of erroneously reported information. Go to www.annualcreditreport.com and pull a copy of your credit report. Examine every debt that shows up. If anything inaccurate is present, dispute it immediately.
- Get your finances on track. While this may be difficult, especially if you are out of work, do your best to get any late payments current and pay your bills on time. Avoid incurring liens, foreclosures, repossessions, or collections on your credit report.
- Clear up any identification discrepancies. Red flags will go up to employers if there are issues with verifying your identity. If your credit report is showing alternate social security numbers, misspelled names, or alias names, dispute these with the credit bureaus.
It benefits you to be ready for all facets of the hiring process, and that includes a credit history review by the potential employer. By being aware that they can use your credit report, but not your credit score, to help them make their hiring selection, you can prepare as best you can, understand your rights, and not be surprised at the last minute.
Have you ever had your credit report stop someone from hiring you? Share your story with your fellow readers below!