Could a Bad Credit Report Keep You from Your Dream Job?

So you’ve found your dream job, completed the interview process and now seem a shoo-in for the position. But there’s one more hurdle to clear: the company wants to conduct a credit check on you before they offer you the position. Is it possible those missed car payments from two years ago are going to prevent you from getting the job?

The answer is, “maybe.” While potential employers can’t see your credit score or account numbers, the inquiry allows them to see some of your financial information, provided the disclosure doesn’t violate equal employment regulations.

Why Are Employers Looking at My Credit?

Initially, it might seem unfair or even outrageous that employers want to conduct a credit check. For starters, not all companies do a check. A survey of human resources professionals conducted by and the National Association of Professional Background Screeners found that only about 25 percent of employers do credit checks, typically for jobs that involve handling money.

If you’re applying for a position that will require you to see customer bank accounts or credit cards, for example, a company might wish to know if you’ve got a handle on your own finances. Additionally, employees who are deeply in debt might be more likely to steal or mismanage their employer’s funds.

What Information Are Employers Seeking, and From Where?

While some employers might be approaching the three credit agencies – Experian, TransUnion, and Equifax – directly, others might be using a third-party screening tool to seek out your credit history, including your paying habits and any judgments, liens or bankruptcies. They may also be looking for previous addresses, prior employment information, aliases used, and any variations in your social security number.

This information is useful in determining financial responsibility, money management, and the possibility of wage garnishment by state or federal tax authorities. This check before employment won’t affect your credit score the way applying for a new credit card might, and companies are engaging in these credit checks to protect themselves from financial risk.

What Are My Rights?

According to the Fair Credit Reporting Act, an employer must notify you if it intends to do a pre-employment credit check and must get your permission in writing. The notification needs to be in clear and direct language and can’t be cloaked in “fine print.” Some states have laws that limit or prohibit pre-employment credit checks. (Employment law website NOLO has compiled a list of those states and their statutes here.)

You can, of course, refuse to give permission for the credit check, but this could lead to a company rescinding a job offer. HR professionals advise would-be employees with less-than-stellar credit to proactively explain the reasons why to the person making the hiring decision. By volunteering the information upfront, you may be able to reduce the impression that you’ve got something to hide.

If you’re an employer in need of pre-employment screening services, rely on DataCheck to the information you need.

Posted in