Why Employers Check Your Credit Report

How your credit can get you hired, fired, and even stop a promotion. Part i of iv: Why employers check your credit report.

You may be shocked to learn your credit plays an ever-increasing role in your employment. Your credit report is used, in part, to determine if you’re worth hiring.

When you apply for a job, you agree to a background check that includes your credit report in many cases. The Fair Credit Reporting Act allows employers to do this.

This trend gained traction in 2001, and now  25% of HR professionals use credit or financial checks while hiring for some positions. So, why would your credit report matter to a potential employer if you have the talent, education, and experience for the job? It’s because the resume is too easy to fake and too hard to verify.  Additionally, checking references and specific items on your resume may take too long and cost too much.

Employers may use your credit report to look for financial stability, frivolous automobiles, too many credit cards, collections, tax liens, late payments, challenging mortgage obligations, previous address, and employment verification.  This long list also includes a potential killer: your responsibility to pay your debts with a proposed salary.  The bottom line is simple.  Financial problems are likely to challenge one mentally, even while on the job, and the credit report gives them an indication.

The truth is most human resource departments are not qualified to evaluate your credit report, but they do anyway.  It’s highly subjective because employers aren’t allowed to see your credit score, just your credit report.

Even small businesses are using inexpensive third-party background checks. However, your credit report goes to the small business owner who’s even less likely to understand it than a human resources manager. If there’s a loan officer in human resources, you may get a fair review of your credit report. But what are the odds of that?

So, what can you do?

Use Smart Credit!  SmartCredit.com is the pioneer of your Hiring Risk Score based upon your credit report.  Our members can see what an employer sees and how they may judge your credit report.

Be proactive!  Make sure your credit is the best it can be using our Action Buttons to fix errors, get goodwill corrections of negatives, and settle debts.  You can do this all with the simple push of a button.  Your actions go directly to your creditors, who then update all your credit reports.  It’s fast and effective.

Coming soon:

Part ii – Why your credit report can stop you from getting the job or promotion.

Part iii – The job applicants’ death spiral.

Part iv – Getting fired because your credit changes during employment.

David B. Coulter – founder and C.E.O. of SmartCredit®

Categorised in: Credit Report, Credit Score, Debt, Employment, Improving Credit, Money & Identity

This post was written by David B. Coulter