These days, your credit rating is almost as important to your personal finances as your bank accounts. That’s because this can affect everything from your ability to get a loan to your ability to find a job. Yes, that’s right: your creditworthiness can affect your job search.
One of the common job hunting myths is that your potential employer can see your credit history. If you have a low score it can certainly lead to some anxiety.
The good news is that employers tilt see your credit scores. However, there is also bad news: employers can Check your credit reports, or at least a limited version of it. And depending on the employer – and what he finds – your creditworthiness can lead to a rejection notice.
What your potential employer can actually see
Employers cannot see your credit history, nor do they get the same version of your credit reports that lenders get. But you still get a lot of information about your financial background.
An employer version of a credit check can include:
- Surname
- Social security number
- Address
- Current Debt
- Payment history
In most cases, your prospective employer likely already has your personal information, such as your name and Social Security Number (SSN), which are often required to do the background check. Aside from your SSN, the personal information in your credit reports is available through a basic background check that includes a search of public records.
> So it really is your current debt and payment history that is the meat of the report. These can be mortgages, car loans, personal loans, or credit card accounts. Your credit reports show the last reported balances and the current status of your payments.
It should be noted that employers – and potential employers – need your approval for the credit check. Many companies will include this in their initial application.
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Some industries may be more interested than others
How much weight an employer attaches to your creditworthiness – or whether he checks it at all – can vary greatly depending on the industry and company. For example, if you want to work at a local drive-thru, your credit card debt is likely not an issue.
However, when applying for a job at a bank or credit bureau, your credit rating can have a huge impact on the decision to hire. If you don’t manage your finances consistently, a company may not want you to manage their finances. Excessive debt can also be a red flag in certain security-related jobs, as some employers may find that those with excessive debt are more susceptible to outside manipulation (such as bribery).
If a company intends to reject your application based on your credit check, it is legally obliged to notify you in writing that it is taking “disadvantageous measures” based on your creditworthiness. The company is also required to send you a copy of your report so that you have an opportunity to challenge any incorrect information.
The best ways to clean up your credit reports
They have three main bureaus, one from each of the three major credit bureaus: Experian, Equifax, and TransUnion. You are normally entitled to a free credit report from any office each year, although due to the pandemic you can get weekly reports through April 2022. You can access your free reports at AnnualCreditReport.com. (The site is secure and operated by the credit bureaus.)
As long as your credit history is in order – that is, you have no late payments, written off cards, or defaulted accounts – you probably don’t have to worry about an employer reviewing it. However, if your credit history isn’t looking its best, you may be able to clean it up.
The first thing to do when reviewing your reports is to make sure it says it all should be on them. If you don’t see any accounts or have other errors in your reports, you can file a complaint with the credit reporting agency to have the information corrected. You must file a separate dispute with each office for each incorrect item.
If the problematic items on your credit reports are legitimate (in other words, if you really missed that payment or were late on that account) then a dispute cannot get them removed. Instead, you might just have to wait for them to get your reports out of date. Most negative items are automatically deducted from your credit reports after seven years.
While your credit history is not the very likely one that will make you lose most jobs because of your credit history, knowing where you are and what potential red flags you might see is good to know. And given the importance of your creditworthiness to your overall finances, it is information that you should have even when you are not actively looking for a job.
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