When you are applying for a job, demonstrating relevant experience and acing the interview may not be enough to secure the position. Regardless of the type of job you are seeking, you could be turned down by an employer because you bounced some checks or were late in paying your bills. Concerned about theft and liability issues, growing numbers of employers are running credit and other background checks on job candidates before making offers of employment.
With some limitations, employers are permitted by law to conduct checks on job candidates during the hiring process and when evaluating current employees for promotion, reassignment, and retention. It is increasingly common for employers to compile a consumer report detailing a job candidate’s personal and credit characteristics.
While screening job candidates for credit problems has long been routine in banking and financial services, the practice is now spreading to a wide range of industries. Why do employers investigate a job candidate’s credit history? Some employers may be concerned that an employee with money problems would be tempted to steal, especially if the employee handles money. Depending on the position, employers may also view an employee who is under financial pressure as a security risk, subject to bribery and vulnerable to offers from competitors trying to buy confidential information. In addition, employers may view a history of bad credit as a sign of irresponsibility that could be indicative of the candidate’s future job performance.
Before embarking on your job search, you should request copies of your credit report from the three nationwide consumer credit reporting companies: Equifax, Experian, and TransUnion. With identity theft on the rise, it has become more important than ever to remain vigilant about your personal credit records. You are entitled under federal law to request one free credit report a year from each of these credit bureaus. To order your reports, go to www.annualcreditreport.com, or call the Annual Credit Report Request Service at 1-877-322-8228.
When you receive your reports, check for any mistakes that might negatively affect your credit score. Common errors that can appear on a credit report include mistakes involving your name or a similar name, inclusion of someone else’s credit problems in your file, incorrect balances on current credit accounts, closed accounts listed as current, accounts of ex-spouses still listed with yours, and an inaccurate Social Security number.
Notify the credit reporting agency that issued the report of any information you believe to be incorrect. The agency is then required to reinvestigate and, subsequently, confirm, correct, or delete the information. Even if the reinvestigation shows the material to be accurate, you may add brief explanations of extenuating circumstances to your reports.
If, however, your credit report reveals some genuine problems, you may have time to repair some of the damage before you begin your job search. While most negative information can be reported for seven years, you may be able to improve your score by paying off any outstanding debt, taking on no additional debt, and paying all your bills in a timely manner.
Under the Fair Credit Reporting Act (FCRA), the employer must obtain written authorization from the job candidate before requesting information on the candidate’s credit history from a consumer credit reporting company, and the employer must notify the candidate if information contained in the report results in an adverse employment decision.
If a prospective employer asks you for permission to review your credit history, you are within your rights to refuse to sign the authorization. But, as this would likely jeopardize your chances of getting the job, a better approach may be to simply tell the employer upfront about any credit problems you believe a report might reveal. You may be able to explain, for example, that your financial difficulties were the result of exceptional circumstances, such as a divorce, a medical crisis, or a period of unemployment. The employer may be willing to overlook a bad credit report if you are otherwise qualified for the position and are open and honest about your situation.