What To Know About Job-Related Credit Checks

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Credit Card Applications » Research » Guides » Building Credit History » What To Know About Job-Related Credit Checks

What To Know About Job-Related Credit Checks


Updated: December 26, 2012

The content is accurate at the time of publication and is subject to change.
It’s very common nowadays for an employer to check out credit reports, with the credit card and on any potential employees. Of course, they cannot do this without letting their potential employee know about it before (due to government regulation). Why Why does an employer need one, in the first place? This is because it is a reflection of a person’s financial habits and can also, to some degree, say a lot about other aspects of their character. Having bad credit, even, could cost you a job! Sometimes though, when a person is unemployed for a great period of time, their credit suffers. This leaves the job seeker in a catch-22. As of 2006, when the Society for Human Resource Management was surveyed, about 43% of responding companies said they ran credit checks on their new hires. This can be hurtful for someone who is just starting out (i.e. someone directly out of college) because, usually, they don’t have much credit to check. Certain politicians have actually come out against this tactic, but job credit checks only seem to be getting more popular. Two states, though, do prohibit these credit checks:  Hawaii and Washington. The Importance Although credit histories don’t carry as much weight as criminal records or even identity verifications, they still go a long way in factoring an employee’s position. This can be dependent on the company, though:  the TSA blocks off potential candidates with more than $5,000 owed in debt. Sometimes employers simply do the credit history check as a way of seeing past employments, as well as addresses of the employee and verifying information. That’s almost the same as when applying for a credit card, a credit card issuer does a similar check with employers to verify the candidate’s job history. Where If you find yourself searching for a job in the financial sector, on the other hand, a credit check will be of vital importance. Sometimes companies that deal with money will use credit checks as determining whether or not their new hire is dependable or not. This can include financial executives, as well as people who work with valuables (such as jewelry) on a regular basis. In that field, people with big debts can be viewed as threats, because the company’s line of thinking assume that they have a greater likelihood of stealing or committing fraud themselves, because of their less-than-stellar financial situation. Understandably, then, companies keep away after a credit check which has shown more-than-average debt and other financial hindrances. Private Or Government? While private companies do credit checks, it is more likely that your credit history will be viewed if you are applying for a job with the federal government. This can be either by working for them directly or even as a contractor. A bankruptcy could surprisingly not hurt your credit history; according to the U.S. Code Title 11, employers cannot discriminate against those who have declared bankruptcy. If you should find yourself having a bankruptcy held against you, you can take legal action against the company. It Really Is All Up To You And remember that an employer is always supposed to tell you if somehow they have used your credit history against you, as federal law demands it. Rest assured, though. If you are someone with credit card debt or a loan you defaulted on, you have to give your employer the a-okay before they check your history. So if you are not entirely comfortable with the idea of them checking up on your credit history, you don’t have to be. It can be advised, whether or not you are looking for work, to always have a handle on your credit report. That way, you can act before someone else does so.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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