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What Shows Up On A Credit Check For Employment?

Cathie Ericson4-minute read
September 21, 2020

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If you’re applying for a job, you’ve likely spent hours polishing your resume and practicing answers for all those tricky questions, but you might be concerned about an element over which you have no control: what shows up on a credit check for employment. Here’s everything you need to know to put your best foot forward to nab that job.

What Is A Credit Check?

A credit check is when someone pulls your credit report in order to get a peek at your financial history. In the case of a credit check for employment, it will show your potential employer how you handle your finances, specifically your history of handing credit and loans, as in how much money you borrow and how well you pay it back.

While some states prohibit employers from pulling credit reports, in other areas employers are allowed to look at your credit information to assess whether they think you are a good candidate. Don’t worry; they won’t do it without your knowledge. The Fair Credit Reporting Act ensures that employers must inform you in writing that a credit check for employment is part of the application process, and you in turn must submit in writing your authorization for them to do so.

Credit Background Check

Before your employer has a chance to look at your credit report, it’s smart to check it yourself, just to make sure the information is accurate. Often there are errors that must be resolved, so it’s best to start this process well before you job hunt to allow ample time for fixing any erroneous data.

You also should make sure your credit habits are up to par, including always paying your bills on time and not overextending the credit you do have. After all, those responsible financial habits are the same ones that make you a reliable employee, so why not have your financial life match your professional life?

Employment Credit Report

If you do discover something on your credit report that you think a potential employer might consider troublesome, you can consider whether you’d like to address it with them in advance. Maybe you were going through a rough period and have since made changes to burnish your habits that aren’t yet reflected on the report, or you otherwise have a reasonable explanation why your credit report isn’t as clean as you’d like. Often it is best to address the issues head-on, with a spirit of openness that may be appealing to your future employer.

What Does An Employer Credit Check Show?

The report they see is different from the report a lender might see; this employer-specific credit report blocks some personal information, such as your birth year, marital status and other details that could be used to discriminate against you. And believe it or not, that includes the fact that an employer can’t discriminate because you’ve had a bankruptcy (although the truth is that most people with bankruptcies have other transgressions on their credit report that will show).

In addition, the report your potential employer sees won’t include any account numbers or even your actual credit score. That’s because the employer’s goal is to identify habits that might indicate you would be less than a model employee, as opposed to exactly what your credit is.

But the best news is that having a potential employer look at your report won’t affect your credit, because it’s considered a “soft pull,” compared with a “hard” credit pull from a lender.

Why Do Employers Do A Credit Check?

An employment credit check is essentially designed to determine how reliable an employer thinks you will be – especially if you’re in a position where you’ll be handling money, such as if you’re working in a bank or retail store, or if you need a special security clearance or often deal with confidential information. But it also shows how seriously you take your obligations – if you don’t bother to pay your bills on time, is there a risk you might also be cavalier with clients or deadlines?

Employers might also be looking at your credit utilization rate to see if you are negligent with money or seem to have a problem with overspending, which could indicate your overall level of responsibility. Of course, the biggest red flag would be if there is any indication that you could be a candidate for fraud, such as having a propensity to steal money to cover large debts. Of course, having poor credit or past transgressions doesn’t make you a “criminal,” but it can raise questions to potential employers, and it’s wise to be aware of that possibility. 

If the company decides not to offer you a job based on information they found in your credit report, they have to let you know exactly which data excluded you from the job. That’s helpful information to have going forward, as you might want to address it upfront with another employer to ensure the same thing doesn’t happen again.

However, the best way to ensure that your credit check for employment helps, rather than hurts, your job chances is to make sure that you’re always doing your best to keep your credit clean. If you have you have less-than-stellar credit, now is the time to make changes that can help you in all aspects of your life.

By taking some simple steps – most importantly, always paying your bills on time and taking care not to amass too much credit – you’ll be better positioned to get the best rates on credit cards, mortgagespersonal loans and more. And of course, that improved credit report will help show potential employers that you’re the right person for the job.

Rocket HQSM has partnered with CardRatings for our coverage of credit card products. Rocket HQ and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

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Cathie Ericson

Cathie Ericson writes about personal finance, real estate, small business, education, retail/ecommerce and other topics for a host of brands and websites. Her work has been featured on major media websites, including U.S. News & World Report, Forbes, Business Insider, The Oregonian, Industry Dive, Boston Globe, CNBC, MSN.com, Realtor.com and Yahoo Finance, among many others. Find her @CathieEricson.com.