Credit Infocenter

Bad Credit and Employment - Can Employers Pull Your Credit Reports

How Employers Use Bad Credit Against You

Last Updated: July 20, 2016

When looking for a job, you need all the help you can get presenting yourself as the ideal candidate to a potential employer In today's tight job market. A solid resume, references and interview skills, are all great to have but these days you could be sorry if you overlook another, all-important area, your credit report. When competition is tough, bad credit could be what tilts the scales in another candidate's direction. So, make sure to pay attention to your credit reports while you are sprucing up your resume.

Do Potential Employers Have Legal Right to Pull Your Credit Reports?

Yes, and many do. According to a survey conducted by the Society for Human Resource Management, as many as 6 in 10 private employers pull credit reports for the purposes of hiring at least some of their candidates. And as many as 13 percent of them run credit on all of their applicants. That said, some states have laws enacted limiting the rights of employers when it comes to pulling credit reports for potential or current employees. Check the rights specific to your state if you live in California, Connecticut, Hawaii, Illinois, Maryland, Oregon or Washington.

Do Current Employers Have Legal Right to Pull Your Credit Reports?

Yes, though it's not clear how many are likely to pull a credit report for the purposes of evaluating a current employee. However, there may be reason to do so that run the gamut from consideration for a promotion to grounds for termination.

Why Do Employers Base Hiring, Promotion and Firing Decisions on an Employee's Credit Report?

Though there is no research supporting a correlation between credit history and job performance, employers evidently see things differently. Reasons cited for running credit reports on potential employees include fear of theft or embezzlement, being sued for hiring someone who turns out to be a bad egg, and general association between bad credit and irresponsibility. In other words, proven or not, some employers choose to associate bad credit with questionable character, which isn't the most marketable of qualities.

For What Positions are Credit Reports Most Often Pulled?

Employers across all industries pull credit reports for hiring purposes, though the majority are limited to positions in which employees handle money and/or are privy to personal information, such as credit card numbers and social security numbers.

Will You Be Informed if an Employer Pulls Your Credit Report?

Yes, in fact, your written permission is required to do so. This means you have the legal right to refuse, but by the same token, the employer has the legal right to dismiss you as a job prospect. On the other hand, if you do grant your permission, and the report turns out to be the reason for a hiring, promotion or firing decision, the employer is legally required to tell you so. Not only that, but they must disclose which credit reporting agency provided them with the report, as well as a copy of the report for you to review.

What Information do Employers See on Credit Reports for Current or Potential Employees?

What employers see on your credit report is essentially the same as what lenders see when they pull your report, with two notable exceptions. First of all, personal information is removed, such as sex and marital status. Also, if you make over $75,000 a year, the report employers see will include listings that fall off of the versions seen by lenders, such as bankruptcies more than ten years old, or lawsuits, judgments and paid-off tax liens more than seven years old. Also keep in mind that employers may see previous employers listed on your credit report. This is important to note, as they may see on your report an employer that you did not list in your job application - a discrepancy that could be viewed as an attempt to hide some sort of past employment.

What Negative Listings Weigh Most Heavily?

Poor credit in general can color an employer's opinion of you, but the listings weighted most heavily against you are current outstanding judgments and accounts currently in debt collection. In other words, older, settled debt is unlikely to pose as much of a problem, even in the case of foreclosures and tax liens. What this suggests is that employers may be relatively forgiving of bad credit, provided it's part of your past.

What if a Credit Report Pulled by a Potential or Current Employer Includes Inaccurate Information?

Under any circumstances, you have the right and responsibility to dispute any listings you believe to be inaccurate in your credit report. In fact, you have the right to dispute any negative listing at all, whether it's accurate or not. Here at CreditInfocenter.com, we have all the information you need to dispute these negative listings with credit agencies, which then have 30 to 45 days to provide requested proof. If and when they fail to do so, the listing must legally be removed from your report.

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How to Prepare for a Job Search If You Have Bad Credit

The more you know the better. Just a vague idea of bad credit you checked a few years back isn't enough. Credit listings change regularly and without any notice to you. It is essential you get current copies of your reports from all three major reporting agencies before your job search begins. This way you know just how bad it is and, most importantly, you can prepare an explanation if and when an employer tells you it's your bad credit report that did you in. A short, but sweet, heartfelt explanation of how you got into the mess, and how you got out, could do the trick. Beyond that, start cleaning up your credit! We have a wealth of information here at CreditInfocenter.com on how to do just that.

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