What you need to know about employer credit checks

Feature Article- Fri., May. 13, 2011
- Contributed Photo

If you’re a recent college graduate or a professional looking for work, you know you need every advantage to compete for work in a marketplace where there are more applicants than opportunities. It pays to be in control of every variable, from picking the right suit and honing your interview skills to making sure you know what’s on your credit report before a potential employer looks at it.

If you’re applying for a job, it’s very likely that your potential employer will want to check your credit. More employers than ever are checking job applicants’ credit history. Sixty percent of employers now check applicants’ credit reports, according to a report in the Washington Times. That percentage has climbed nearly 20 percent in the past five years, according to the report.

Employer credit checks can be problematic for many people in this economy. If you’ve been out of work for a while, you may have fallen behind on your bills. And if you’re a recent college graduate, you probably have little credit history – perhaps a few credit cards with a running balance, but probably not a home loan that can help add depth to a credit history.

Reviewing your credit report for inaccuracies before an employer sees it is an important step for job-seekers, experts agree. It will also help prepare you to address any credit-related concerns a potential employer might have.

As you’re reading want ads and scouring job websites, keep this information in mind:

• Obtaining a report and score, such as the PLUS score offered by CreditReport.com, can help you understand your credit status before a potential employer asks to check your credit. While such a score and report are not necessarily the ones a potential employer will obtain, they can give you a snapshot of your credit status.

• The basics of credit management remain the same, no matter what your situation: pay bills on time, maintain a good ratio of credit used to available credit, show a long history of timely payment, and be smart about the types of credit you use (loans, credit cards, etc.).

• Employers will not be able to check your credit until you give your consent, in writing, for them to do so. While you may expect that an employer would check your credit if you’re applying for a job in the financial services industry or another industry in which you’ll be directly working with money, be aware that a broad spectrum of employers are now checking credit for applicants at all job levels – even some you may not expect.

• If your credit history has some blemishes, you may want to consider adding a personal statement of explanation to your credit report. While credit experts agree that such statements usually have little impact on potential lenders, an employer may view your explanation differently.

Finally, hold your head high regardless of what’s on your credit report. In this economy, many people are facing financial hardship through no fault of their own. If you’re one of them, be honest and open with a potential employer, explaining your challenges and what you are doing to ensure you’ll be able to meet your financial responsibilities. If your credit history is good, consider it one more tool to demonstrate to potential employers that you are a responsible and desirable worker.

Courtesy of ARA Content



Employers are increasingly

Employers are increasingly running credit checks on job applicants and using that information to make hiring decisions. A Society of Human Resources Management (SHRM) survey reported that 60% of employers get credit reports on some applicants. An employment credit report includes identifying information, including name, address, previous addresses, and social security number. It also shows the debt you have incurred including credit card debt, mortgage, car payment, student loans, and payday installment loans and your payment history, including late payments. Before an employer can get information for employment purposes, the Fair Credit Reporting Act (FCRA) requires that they must notify you in writing and get your written authorization. If the employer is simply conducting inquiries (rather than running reports) they should also ask for your consent.
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