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What Employers See When They Do A Credit Check On You, And Why It Matters

A 2012 survey by the Society for Human Resources Management found that 47% of employers will utilize a credit check during the hiring process, likely as a means to find out your weaknesses. You employer can only look at your credit report with your written consent, but that is less helpful than it sounds. Should your employer ask you for your credit history, saying “no” might be a tricky choice – what if they then assume you have something to hide? And what if they use that suspicion as a fuel to hire someone else? Before you say no, you should know exactly what your employer will see.

Busting Credit Check Myths

First of all, even if your employer gains access to your credit report, the odds are they are not going to actually check it. Of the six in ten companies that usually pull credit reports on some candidates, a measly 13% actually follow through and check all of them. If your job is outside the realm of finance or profits, you are probably safe from scrutiny. And when your employer does look over the report, they aren’t checking your credit score but probably your past employment, legal activity, and insurance.

Second of all, even if you do have bad credit, most people don’t know how to properly read the reports and process all of the data they are seeing. Your employer could have the information sitting right in front of him and not get much from it, unless they see a bankruptcy (and in that case they are still forbidden from discriminating against you by Section 525b of the bankruptcy code). If by some chance they do see that you have ups and downs in your past, they will not punish you for failing to be perfect. Everybody has a checkered past and has struggled to stay on their feet financially, and you won’t be punished for one mistake.

What You Can Do

Before you panic, get a copy of your own report for free from Credit.com. It will give you an overview of your information and you can see if there is anything amiss that may prompt further inquiries. If there is inaccurate information in the report, you should act quickly to notify the credit bureaus, who will correct or delete it. Not everything is black and white, either. You can also contact the bureau and write out a short explanation for any black marks that may have occurred during a layoff, when there was a family illness or death, etc. This will also help your future manager get a fuller picture of your situation which can only help.

If your potential employer wants your credit report, keep a calm head. Although your employer is doing a credit check on you, it’s likely that their main motivation is to protect themselves legally. To offset negligent hiring and protect themselves should there ever be a trial for employee embezzlement or the like, the company will need to be able to say that they completed a thorough background check – which includes a credit check. However, if the Equal Employment For All Act passes through Congress into law, employers would have a limited ability to access your credit reports and use them against you.


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