Can Employers Check Your Credit History

Can employers check your credit history? Yes, they can and according to the Society of Human Resource Management up to 35% of employers will run credit checks when evaluating job applicants.

Recruiting new employees or promoting existing staff is an expensive and time consuming process. With this amount of money and time invested in recruitment process companies what to make sure that they hire the best candidates for the job available.

Why Do Employers Conduct A Background Check?

Under federal law it is mandatory to conduct a background check on  a prospective employee for certain  jobs. Many companies have learned expensive lessons when they relied solely on the resume only to find out later that the applicant did not match the qualities or qualifications written in their resume.

There have been many cases where job applicants have blatantly lied on their resume or application form. This can be a costly mistake and for this reason more companies are are checking peoples credit history as part of the employment screening process.

There are a number of reasons why a prospective employer will want to check your background:

• If you have a criminal record
• negligent hiring lawsuits
• Information on your resume is not falsified
• For government jobs or jobs working with children a background check will be mandatory
• Are you right for the role
• Did you actually graduate from college
• Where you really the VP of Fortune 500 company

What Can Employers Check?

The Fair Credit Reporting Act (FCRA) lays down the parameters that prospective employers can use during the job screening process. Under the FCRA a credit background check is referred to as a consumer report which contains various personal and financial information about you.

When conducting a background check certain information that is considered confidential cannot be  accessed by an a potential employer without  your permission and written consent. This  can include the following information:

• Educational records - high school, college, continued education
• Bankruptcy filings
• Criminal background checks - depending on the state certain criminal records and convictions
• Medical records
• Credit report

Why Employers Want To Know About Your Credit History?

Your credit history can help an employer determine if you are responsible with how you manage your finances. Your credit report can also tell them the state of your finances and how much debt you have and if you are managing to pay it off effectively.

As pointed out earlier an employer can request access to your credit history but they must notify you and you have to give them written consent. Refusing to give them permission could indicate that you may have something negative to hide which could have an adverse affect on your chances of getting the job or interview.

Your credit report that is supplied to employers will be slightly different to those that are supplied to banks and other lenders. However, certain information contained within it will remain consistent. When employers check your credit history they will be looking at any warning signals that may concern them about your potential for the job position you are applying for.

These can include the following:

• Foreclosures and bankruptcies
• High debt to credit ratio
• Late payment fees
• Defaults and Liens

The above could indicate that you are not effective at managing your finances or budgeting. This could concern a prospective employer about your character and discipline. If you are concerned about your credit report and how it may affect your career you can contact any of the three credit reporting agencies and request a copy.

Can Potential Employers Check Your Credit Score?

Many people get confused with the terms credit report and credit score thinking they are one of the same thing. They are not. We have already explained what the credit report is however, your credit score is not the same thing. The score is a is how your credit risk is graded. The score is calculated based on the information in your credit report. The is given a rating on the credit score scale between a range of 300 and 850 based on the FICO scoring system.

As these are different many people believe that the credit score has a determining factor in whether they will get a job or not. This is not the case as only your credit report can be used by companies when they conduct employment background checks as part of the job screening process.

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