RECENT GRADUATE TOOLS
by Tyler D. | 5 min read
For many job hunters, the idea that a prospective employer could check our credit as part of the hiring process sends us into a cold sweat. There’s quite a bit of misinformation and hearsay out there regarding those credit checks, though. We’re going to take a look at the ins and outs of employer credit checks to see what they’re looking for and how we can pass the test.
First things first – an employer doesn’t check your actual credit score. Thanks to the Fair Credit Reporting Act, employers aren’t allowed to see any applicant’s credit score. What they can see is an applicant’s credit history, but for that, they need the applicant’s written consent. While we can always decline to provide consent, that never looks good to a potential employer, so it's almost always better to give them the go-ahead. Certain states have additional guidelines regarding credit checks, and several require employers who check an applicant’s credit history to provide a copy of the credit report to the applicant.
The good news is that if an employer asks us for consent to run a credit check, we’re likely a serious candidate for the job. Credit checks cost money and they require time to read through them, so employers certainly aren’t going to run one for every applicant.
While every employer is different regarding credit checks, the most common reason to check an applicant’s credit is when the position that’s being filled has some connection to the company’s finances. The employer wants to see if we have any issues, such as a significant amount of debt, that could make us more inclined to steal from the company. Credit checks are common for high-ranking corporate positions and accounting positions because of the potential for fraud or embezzlement. However, even entry-level positions that involve handling money, such as cashiers, have the risk of employee theft and therefore often require a credit check.
Even if the position doesn’t have anything to do with the company’s finances, employers may still want to see our credit history to get an idea of how we handle money. It stands to reason that if we have trouble staying out of debt and keeping our own finances under control, we may also have trouble handling work responsibilities. A large amount of debt could also present a distraction that impedes our performance at work.
Obviously, the best way to prepare for any credit checks run by a potential employer is to maintain a strong credit history. That includes avoiding debt, paying bills on time, and using credit cards responsibly. If we already have credit issues, there are steps we can take to lessen any possible damage from an employer’s credit check.
We should start by double-checking our credit report, regardless of how good or bad we think it is. Mistakes happen, so it’s important that we look for any possible inaccuracies. We also want to have an idea of what an employer will see when they run our credit. If there are any major issues, we can explain it to the employer upfront to give our side of the story.
If we need to improve our credit quickly or we just don’t know where to start, one option is a credit repair service. These services attempt to remove negative items from your credit report, such as late payments. They can also help get rid of inaccuracies.
Services like these can help, but they can’t work miracles. Certain items stay on our credit history a set length of time. Bankruptcies, for example, remain part of our credit history for either 7 or 10 years, depending on the type of bankruptcy. No credit repair service can do anything about that, so it would be a waste of time and money to hire one if a bankruptcy, or another impossible-to-remove item, was the main black mark on our credit history.
Where these services come in handy is finding all the negative items that are able to be removed, and getting them off our credit history. Credit repair companies have extensive knowledge of credit and how credit histories work, so they can spot things the average person will miss.
By managing our credit well, we can avoid any potential issues.
We shouldn’t panic at the thought of an employer running a credit check. By managing our credit well, we can avoid any potential issues. Even if we do have a few red flags, being aware of them allows us to confront the issue head-on and provide a suitable explanation to any prospective employer.