It's a scenario job candidates don't want to be in: rejected for the position. Again. You were confident after exiting the interview that you would get the job, but the employer decided to "go in another direction." If you have been struggling to get a job offer, consider whether a poor credit history may be holding you back. Employer credit checks may play a role in whether candidates get the call saying they were picked for the job.
Depending on your state and the various consumer protections provided by state law, employers may have the ability to request a credit report for employment purposes, which could affect whether they bring you onboard the company. Checking your credit history is another way to gather more information about job candidates. Employers often want to know whether candidates are responsible with their finances and can fulfill credit obligations, which is especially important for businesses in key segments of the economy like the financial services sector.
According to a 2010 study by the Society for Human Resources Management (SHRM), 47 percent of employers factored in credit background checks when selecting job candidates. Many of these credit checks were done not only for entry-level positions but also for top executive hires, showing that at some point, candidates from all backgrounds may be subject to these checks.
Here are frequently asked questions about employer credit checks to consider:
Which Businesses Request Credit Reports?
While employers from various business sectors may view your credit report, employers in fields with fiercely guarded trade secrets and patents, such as in the defense, chemical and pharmaceutical industries, are the most likely to request credit checks, according to credit bureau Experian. Companies in the financial services sector also are more motivated to check your report because of the nature of these occupations in handling money and finances.
What Will a Potential Employer Find On My Credit Report?
Through accessing your credit report, employers are able to see information related to lines of credit and debts, which usually include loans, such as student or auto loans, and credit cards.
What's Not Included on the Report They See?
Although your report may contain information about your credit, it will not contain your credit score. According to Experian, the credit reports given out to employers also do not include personal details like the year you were born or any mentions of a spouse.
Will the Credit Check Itself Affect My Credit Score?
According to credit score provider FICO, involuntary inquiries into your credits score, such as a credit check from an employer, do not impact your score.
Why Fix Your Credit History
If you suspect a future employer may pass over your application due to your credit history, take action to resolve any credit issues as soon as possible. Start by requesting your credit report from one of the three main credit bureaus. Determine whether there are red flags that will immediately draw attention from a future employer, which may include a high volume of debts or loans. Resolve any unpaid or overdue items that could be seen as negative by employers.
While SHRM reported almost half of employers may access credit reports of job candidates, companies said they put these checks at a lower priority than other job-related factors when deciding who to hire. There is still hope for you if you have a poor credit report, as employers try to make objective hiring decisions. With the practice of credit checks still in strong practice, however, you should make sure to clean up your credit history to better increase your chances of being hired at your dream company.