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Employers Can Check Your Credit Report as Part of Job Interviews

You might not know this, but managing your credit—including regularly reviewing your credit report—could impact your next job application. According to a study by the National Association of Professional Background Screeners and HR.com, 25 percent of human resource professionals said they use credit or financial checks for some positions in the hiring process, while 6 percent check applicants’ credit for all positions.

Not surprisingly, credit report check is more likely conducted for positions involving security clearance or access to money, sensitive customer data, or consumer information.

Employers use credit checks to gain an extra layer of insight into potential employees and to try and spot red flags that could indicate an interviewee isn’t trustworthy. Repeated late payments on a report could mean the candidate isn’t organized, isn’t responsible, or has trouble prioritizing tasks. If a potential employee is using up lots of their available credit or is heavily in debt, it could indicate financial distress, desperation, or lack of self-control.

A credit report with any of these marks warn employers they could be at risk of theft or fraud from the employee if they hire them.

The credit report an employer obtains from one of the three major credit reporting bureaus—Equifax, Experian, and TransUnion—or a screening company isn’t your full report, however. It is modified to withhold information that could violate equal employment regulations (like your birth year and marital status) and account numbers. The report cannot include negative information that is seven years old (or older). It also cannot include bankruptcies that are more than 10 years old. Your credit score is also not included in this type of report.

What the report will show is your payment record, your available credit, the debt you’ve incurred (credit card, mortgage, car payments, student, and other loans), your name, previous and current addresses, and social security number.

Should you be worried that an employer’s check on your credit report will damage your credit score? No. These types of checks are considered a “soft inquiry,” so it won’t take points off your credit score like a credit card, loan, or line of credit application would. If you’re applying to multiple jobs and they all request a modified credit report, they won’t be able to see each other’s inquiries. But you can, if you request your own complete credit report.

If a company is going to check your credit report, they must get your written permission, as outlined by The Fair Credit Reporting Act. They must also notify you via a pre-adverse action notice if they plan to reject your application based in part or in whole on your credit report. Along with this notice, they should also provide you with a copy of the report they viewed and a summary of your rights.

This notification, along with the three to five business days the employer must wait after notifying you before proceeding, allows you to review the report and either dispute any mistakes with the reporting bureau or explain any derogatory marks on the report to the employer.

While it’s nice to know you’ll be kept in the loop if an employer views your credit history when interviewing you, you can enter any job interview more confident if you’re prepared for these potential credit checks. Be proactive about checking your credit score and report. You’re allowed a free full credit report from each of the three credit bureaus every 12 months. To keep a constant eye on your report, considering ordering your free report from each of the bureaus individually every four months. If you spot errors, use the dispute process to correct them.

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