THD Credit Consulting

Employer Credit Checks: How do they affect you?

Erik Kaplan

Erik Kaplan

Erik is the CEO and Founder of THD Credit Consulting

Hey it’s Erik,     

In most of the country, a potential employer can review your credit report as part of their application process.  Some employers also conduct credit checks on existing employees, often when they are considering a promotion.
The reasons potential employers like to see this information is the belief that long history of unpaid bills, foreclosures and delinquencies could be indicative of a lack of responsibility and the decision making skills that could affect job performance.
Employer Credit Check Regulations
Access to your credit report is governed by the  Fair Credit Reporting Act , which sets the limitations on when and by whom your credit information can be accessed. The FCRA sets a few restrictions specifically on employers who are using credit reports to screen new job applicants.  
When your information is requested, credit bureaus will send over a variation of your credit report meant specifically for employers. This means that they won’t see quite everything that a lender can see – like your credit score.
What are employers looking for?
In simple terms, employers are looking to reduce their risk.  A history of negative public records or other  derogatory marks could indicate to employers that an applicant has a record of untrustworthiness or unsavory behavior.   A credit report completely free from late payments and any other negative marks can indicate to an employer that you have the financial maturity and responsibility to handle the position.
What can you do?
Here’s where being proactive can work in your favor. Before you begin your job search, it’s a good idea to pull your credit reports to look for errors and identify negative items. If there are errors on the reports, you can get them fixed before there ‘s a chance they’ll harm your potential for being hired. Similarly, if your reports have negative information that’s accurate, you’ll want to see if you can get it fixed before an employer sees it. If you can’t, address it upfront with the potential employer.
While employers do not receive your credit score with employment credit reports, your credit score can be a good reference tool for yourself as you work to build or maintain your credit.  If you see an unexpected drop in your scores, it’s important to check your credit reports for errors or even signs of fraud.
If you have questions about employer credit reports, give me a call and we can discuss steps to dealing with these potential employers.
Until next month,
Erik Kaplan
THD Credit Consulting
(800) 822-7120
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