Everything You Need to Know About Employers Checking Your Credit

More and more companies are conducting credit checks as part of their hiring process. This is terrifying news to many job candidates, especially those with less-than-perfect credit. Before you panic about your credit, you need to understand exactly what information employers are entitled to review, and what you can do both before and after your credit report is pulled.

Why They Do It

There are many reasons why an employer may request a copy of your credit report. Some companies, especially those in the financial industry, use credit reports as an additional verification step to ensure they are hiring honest, responsible employees. This is one more reason not to lie or embellish on your resume — the potential employer will be able to verify your claims against the information in your report. Credit reports offer especially useful information when filling positions that handle large amounts of cash or have access to company assets or sensitive information.

What They Need From You

No employer may access your credit report without your express written permission. The Fair Credit Reporting Act protects consumer information by only allowing companies and individuals to view your report in certain specific situations and only with your prior knowledge. When a company gets access to your report without a legal basis for doing so, this is known as having an impermissible purpose.

What's Not Included

What employers receive is called an employment credit report, which is a shortened version of your credit report and only contains a portion of the sensitive information you might normally see. One major item that is not included is your credit score, which may come as a relief if your score is not that high. Additionally, employers can't see any information about your spouse.

What They Can See

Companies can see personal information such as your name, contact information, previous employers and bankruptcies. Your payment history is also on display, so if you have a history of late or missed payments, it can definitely hurt your chances of getting the job, especially if it is a financial position. Employers need to know that you handle your money responsibly, and a credit report that states otherwise is hard to overlook.

What You Can Do

If you think you may have a problem getting a new job because of your credit history, arm yourself with information. As a consumer, you are entitled to a free copy of your credit report each year. Once you receive it, look it over thoroughly for errors. Call or write to each credit bureau to get the errors corrected. If you have the time and the money, consider hiring an outside agency to help improve your credit. For a fee, these types of companies correspond with your creditors and the credit bureaus on your behalf, disputing negative entries and working to get them updated or removed.

A history of less-than-perfect credit is not always a deal-breaker with potential employers. If you are aware of negative marks and discrepancies in your credit report ahead of time, you can take the steps to fix them before they become an issue. Even after a potential employer has seen your derogatory information, being prepared with a thorough explanation might save your chances of getting the job.

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