Why employers check your credit report.

Posted on Credit Report 137


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 that your credit is playing an ever increasing role in employment.  Your credit report is used, in part, to determine if you are worth hiring.

In many cases, when you apply for a job, you are agreeing to a background check which includes your credit report.  The Fair Credit Reporting Act allows employers to do this.

This is a recent trend.  It got traction in 2001 and now nearly 50% of employers are using credit report data to help determine who they should hire or promote.

Why would your credit report matter to a potential employer if you have the talent, education and experience for the job position?

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.  Something else needs close attention and there is little else beyond your resume, criminal background check and your credit report.

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 overall obligation 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 properly evaluate your credit report, but they do anyway.  It’s highly subjective because employers are not allowed to see your credit score, just your credit report.

Even small businesses are using inexpensive third party background checks.  However, your credit report is simply presented to the small business owner who is sadly even less likely to understand what they are looking at than a human resource officer in a big corporation who is not qualified as well.  Get a loan officer in human resources and at least you might get a fair review of your credit report.

What can you do?

Use Smart Credit!  SmartCredit.com is the pioneer of the Employment Score based upon your credit report.  In fact, our employment score is so good, we filed for a patent.  Our members can see what an employer sees and specifically how they may judge your credit report.

Be proactive!  Make sure your credit is the best it should be using our Smart 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 Smart Credit