This is what employers can see when they check your credit

8/10/2022

Finances

Some employers have begun to take the extra step of screening applicants by conducting a credit check. This is typically done in conjunction with the rest of the background check (if any) that a company does when hiring. According to a survey by HR.com and The National Association of Professional Background Screeners, around 25% of human resource professionals use credit or financial checks while hiring for some positions and around 6% check the credit of all applicants.

Typically an employer would check this information to see a few things. First, they may just be looking to see whether you're responsible and organized. If you're not making payments on time or have excessive debt, it could be a red flag. It may be an indicator of personality traits, or even theft or fraud. If you're looking to get a job in finance or something related, showing that you aren't able to manage your own finances can be an indicator that this would be a poor fit.

Don't confuse your credit report for your credit score. Although related, these are two different things. Your credit report (which is what the employer would be looking at) includes your credit history. Your employer sees a version of this. Your credit score is the three-digit number that is meant to summarize the information in the report into a rating.

How much can they see?
You may be wondering exactly what information is disclosed during this credit check. The report available to your employer includes your payment record, the amount you owe, and your available credit. It does not show your credit score, any account numbers, your birth year, or marital status. Essentially, it's a modified version of your credit report that leaves out any information that would go against equal employment opportunity regulations.

If you're concerned about this affecting your credit score negatively, don't. When employers are pulling this information, it's known as a "soft inquiry" according to NerdWallet, and won't take points off of your score.

How will I know if my potential employer is looking?
They need to tell you. In fact, it's illegal not to. The Fair Credit Reporting Act requires the employer (or anyone checking your credit) to present a clear notice and requires written permission from you before taking action. So it shouldn't come as a surprise. If the employer decides to reject you because of the results on the report, they must inform you of this along with a copy of the report and a summary of your rights, according to NerdWallet. You are able to respond to this with an explanation, if you have one and if you're willing.

In most cases, an employer would only check your credit if your job is related to finances, or if there is a security clearance involved. If you are looking to be hired in a field outside of this, chances are there wouldn't be a credit check.

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