What Employers are Looking for when they check Credit -and What They Find?
A credit report for employment won’t reveal your score; it’s just an amended credit report with payments and debt.
Employers often check credit reports to gain insight into hiring potential employees, such as indications of financial trouble that could suggest a possibility of fraud or theft. The company doesn’t obtain credit scores. Instead, they show an altered copy of the credit history.
Here’s what you should be aware of regarding credit checks by employers and what details employers can view, your rights, and how to present the most professional image you can.
What makes an employer look at your credit score?
The credit history of an applicant could indicate potential issues which employers want to stay clear of:
- Many late payments may suggest that you’re not organized and accountable, or you don’t adhere to the terms of your agreements.
- Utilizing a lot of credit or having a large amount of debt are indicators of financial distress and can be seen as increasing the risk of fraud or theft.
- If you have any evidence of a financial mishap may indicate that you are not a good fit for the management of company funds or information about consumers.
The National Association of Professional Background Screeners collaborated with HR.com to conduct a national survey of 1,28 HR professionals on screening checks. The results revealed that 25% of HR professionals employ financial or credit statements when applying for specific jobs, and six percent examine all candidates’ credit history.
Credit checks will be more common to be required for jobs that require the need for a security clearance or access to sensitive customer information or company data. Your current employer could also perform these checks before the start of a promotion.
What are the employers looking for when they check your credit?
Employers looking to hire you may see a modified credit score report, claims Rod Griffin, director of public education at the Credit bureau Experian. The piece is missing information that may violate equal employment laws, like the year you were born or your marital status. A credit report from an employer does not reveal your credit score, nor do they show the account number.
The report will detail your payment history and the amount you owe, and the credit you have available.
Can a credit check by your employer impact your score?
Companies can obtain an employee credit score through one of the three main credit reporting bureaus, Equifax, Experian, and TransUnion, or use a particular screening company.
The credit check is regarded as a “soft request” for your credit score. Therefore it won’t knock the points from your score as an application for a credit card could.
Credit reports will also not display other soft inquiries about your credit score, meaning potential employers won’t have the ability to find out if any other employers have looked into your credit report. However, you’ll be able to see soft inquiries if you ask for your credit reports.
What are your rights under the law?
Notification and authorization: A company must inform you that it plans to examine your credit report and obtain your written consent. The Fair Credit Reporting Act requires it requires the notice to be “clear and clear” as well as not mixed with other languages.
Several states and cities have laws that ban employer credit checks or restricting how reports are utilized. Contact your state’s labor department or the city’s government to see whether you’re protected under the law.
Affidavit before rejecting: If an employer can decide to leave you based on a portion or entirely on your credit score, they must notify you in advance before the decision is taken. It must provide you with a “pre-adverse action notice” with a copy of the report and an overview of your rights.
Response time: The company must allow an appropriate time, generally between three and five days, before proceeding. The objective is to help you clarify the red flags in the report or, if the information you’re looking for is incorrect, allow you to correct the errors with the company reporting the data.
Notice of finality, the right to a free copy: When it takes action, and the company is required to send a follow-up post-adverse-action notice that includes details of the identity of the credit reporting agency, the contact details, and stating your right to obtain a credit report in 60 days.
How do you prepare yourself for an upcoming credit check?
Conducting a credit check proactively allows you to see what your employer might do -and help you rectify any negative marks that are incorrect ahead of time.
You’re entitled to at least one free credit report every week directly from each of the three bureaus by using AnnualCreditReport.com. If you notice any mistakes, make sure you correct them during the dispute process.
After this keeping, your credit score in good shape is a wise financial decision and will help protect your credit score. This is how to do it:
- Be sure to pay your bills promptly. The payment history is the most significant impact on your credit score. Making timely payments improves your credit score and keeps late marks off of your credit report.
- Utilize credit cards sparingly. It is recommended to use less than 30 percent of your credit limit on any credit card at any point in time, and lower is more beneficial. This indicates that you’re not strained in terms of finances and will also help your score since credit use is the second most significant factor that affects scores.
- Keep an eye on your credit report often. Certain personal financial websites, like IPASS, offer a no-cost credit score and information available anytime you want — providing you the opportunity to periodically check for negative marks during the year-long access offered by the credit bureaus.