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Can Employers Pull Your Credit Report

How Long Do Credit Checks Take

Case Decision-FCRA Employer Pulling Credit Reports-Standalone Document and Clear and Conspicuous

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Ways To Minimize The Impact Of Bad Credit When Applying For A Job

Now that you know a little more about why employers might check your credit report, you might be wondering: How do I get a job with bad credit history?;

Thereâs no one answer for every situation. It depends on things like the type of job youâre applying for, the employer, your specific credit history and many other factors.

In some cases, the employer might not look at your credit report at all. And even if they do, a bad credit history may not be a deal breaker. But if youâre worried about how your credit history might affect your job prospects, here are a couple things to consider.;;

Show Why Youâre Qualified for the Job

Donât be afraid to put your talents on display and show the employer why you would be a great fit for the job. You can talk about your relevant work history, education, skills, life experience and so much more.;

For some jobs, your credit history might matter more than others. But showcasing your qualifications is always a good idea.

Explain How Your Credit Wonât Affect Your Job Performance

If you know your credit history isnât great, the FTC recommends being ready to explain it to your potential employer and why it wonât affect your ability to do the job. You could even share how youâre proactively working to improve your credit.;

What Companies Do A Credit Check For Employment

Traditionally, the biggest users of credit reports for hiring are companies in the defense, chemical, pharmaceutical, and financial services industries, according to Experian, one of the three main credit bureaus.

Such industries may hire workers in more sensitive positions, and employer credit checks are used to verify financial honesty and personal integrity.

Most companies dont check credit reports in the early phases of the job hiring process, but wait until after the job interview or making a job offer.

According to the National Association of Professional Background Screeners, companies that do credit checks are most interested in credit history of two to seven years, according to the HR society.

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Why Do Employers Run Credit Checks On Employees

Employers run credit checks on their potential employees to help make hiring decisions. In most cases, nearly all the information included in the credit check relates to personal credit and debt. Some employers believe understanding how an individual handles their own money provides insight into how the candidate will perform on the job.

Some companies run credit checks before extending job offers for any position, while others only perform credit checks for candidates who will handle money for the organization, like accountants or bookkeepers, before making a job offer.

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Strengths And Weaknesses Of State Laws On Employment Credit Checks

Get Your Free Credit Report

Concerns about employment credit checks led to numerous state laws to limit them: California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington have all passed legislation. In 2014, Delaware passed a more limited law preventing public employers from using credit checks for employment decisions.19 Chicago has also passed a law prohibiting credit checks from being used in employment decisions.20 More recently, New York City banned credit checks, and made an effort to limit exemptions .21 There is evidence that there is broader interest, however, since thirty-nine bills in 19 states were introduced in 2014.22 In addition, legislation has been presented at the federal level, including a bill by Sen. Elizabeth Warren and Rep. Steven Cohen .23 This report explores the effectiveness of the credit check laws, and finds that lack of clear enforcement mechanism, exemptions and a robust public outreach effort have all undermined the effectiveness of credit check laws.;

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Why Do Employers Check Credit Reports

Virginia is one of several states that has no laws restricting pre-employment background checks. Around the country, 47% of employers surveyed by the Society for Human Resource Management in 2012 reported that they do check the credit scores of prospective new hires. This is down from 60% in a 2009 report. It is not unusual for job applicants to have poor credit histories in a weak economy, but it may sound unusual for a prospective employer to inquire about a candidates credit. After all, what does a credit report have to do with the position being applied to? Is this grounds for discrimination?

Federal Employment Credit Check Laws

The;Fair Credit Reporting Act; is federal legislation that sets the standards for employment screenings, including credit checks.

Under the FCRA, here are some things employers must do when conducting a credit check on a potential or current employee:

The;Equal Employment Opportunity Commission; oversees how employers can use information from credit checks. Employers are prohibited from illegally discriminating when using financial information to make employment decisions. For example, an employer can’t use one standard for female candidates and a different standard for male candidates.

If you suspect that an employer has used credit checks to negatively impact candidates because of race, ethnicity, disability, age, or gender, you can report the organization to the EEOC.

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How You Can Pre

Heres where being proactive can work in your favor. First, before you begin your job search, its good to pull your credit reports to look for errors and identify negative items.; Youre entitled to your credit reports for free every year from the three major credit reporting agencies.

That way, you can be ready to pre-empt any potential issues by being upfront with the interviewer about your recent credit history. This tactic can help paint you as an honest, forthcoming person. Plus, you can actively explain credit problems an employer might see, so that you get a chance to tell your side of the story instead of being dismissed out of hand.

So if you sign a form that gives an employer permission to pull your credit report and you know that there are problems in your credit file, open up. Talk to the interviewer about why you went through foreclosure, or why youre buried in credit card debt. Better yet, be straightforward about how youre actively working to fix those problems.

You dont need to tell your life story here. But giving an overview that basically says, Look, Ive had some financial problems. Heres why. Heres what Im doing to fix them, may give you a better chance at that job.

Does An Employer Credit Check Hurt Your Credit Score

Who Has Permission To Check Your Credit Report

Your credit score won’t be affected by a potential employer conducting a credit check on you.

“An employment inquiry is treated like a soft inquiry,” Ulzheimer says. “Not visible to other parties and not considered in credit scoring systems.”

According to the 2018 report, employers typically assess applicants based on their long-term credit history four to seven years overall; unlike lenders. That means if there is a big discrepancy from a few years ago, an employer may still ask you about it even if your most recent credit history is healthy.

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Youll Know If They Pull Your Report

A potential employer cannot legally pull your credit report without your permission.

So, youll definitely know whether an employment credit check could happen. Youll have to sign a release form to give the employer access to your information. And, encouragingly, employers usually only run employment credit checks on the most viable job candidates because these credit checks cost the employer money.

This isnt true of all employers. Some will run employment credit checks as part of first-round screenings. But they still have to get your permission. However, denying an employer access to your report may put you out of the running for a job.

If you signed a release for an employment credit check, but you know that there are errors on your report, know that you may not be able to correct those errors before the employer pulls your report. It may take weeks or even months to fix.

Your Credit Report Rights As A Job Applicant

Job applicants can reasonably expect to have a background or credit check run as part of the process of seeking employment. If you know your consumer and credit reporting rights, however, you can make sure youre treated fairly and legally by potential employers.

Here are the rights you have as a job applicant when it comes to credit checks.

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I Am Applying For A New Job And They Have Asked Me To Sign A Form Which Allows The Employer To Run A Credit Check Can The Employer Use That Information In Determining Whether To Hire Me

Possibly. Many employers now use the same credit files used by credit card providers and mortgage brokers to determine whether you are the most financially stable and reliable employee for the job. Credit agencies can share your information with those who have a legitimate business need for the information. An employer using your report to determine your eligibility for “employment, promotion, reassignment or retention” is therefore entitled to access. Whether an employer can run a credit check will depend on what state you live in.

The Fair Credit Reporting Act governs the use of credit information in the employment setting. The FCRRCA is designed to ensure that you are aware of and agree to your credit report being used for employment purposes, and that you are notified promptly if information in a credit report may be used in a negative employment decision. If you are job hunting, you may want to check your credit report with each of the three major credit reporting agencies . You are entitled to a free copy of your report from each agency every twelve months. For more information, see the official website to obtain your free report at

How Can I Prepare In Advance For An Employment Credit Check

Understanding Your Equifax Business Credit Report

In order to maximize your chances of getting hired for the job you want, itâs best to maintain good credit, or at the very least know what your credit report shows, so you can come prepared to provide an explanation for any red flags your potential employer might find.

Itâs a good idea to review your credit report at least once a year. You can use Borrowell to check your credit report for free without hurting your credit score. This will allow you to check for any mistakes in your credit report. Credit bureaus are susceptible to human error, so if you find any mistakes, you can take the proper steps to dispute errors on your credit report.

Checking your credit report will also show you what potential employers might find concerning. You can then be prepared to answer questions about what happened and what youâve done to improve your circumstances.

When you check your credit well in advance of a potential job opportunity, you can also take action to improve your credit score and fill your credit report with more positive information. When the most recent sections of your credit report show approved credit accounts and payments made on time, the employer will be less likely to focus on concerning information from the past.

Regardless of what industry youâre hoping to work in, it helps to check your credit report often, know exactly whatâs in the report, and be ready to speak about it to a potential employer. Best of luck with your job hunt!

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What Do I Do If I Think My Employer Has Violated The Fair Credit Reporting Act

Under the FCRA, a current or prospective employer cannot be sued for defamation, invasion of privacy, or negligence regarding its use of the information in the credit report, unless the information was false and provided with malice or willful intent to injure you. This is a very high legal standard and unlikely to be met in most cases.

However, an employer who violates the FCRA can be sued for actual damages, court costs, and reasonable attorney’s fees, and in the case of a willful violation, can be sued for punitive damages. The Federal Trade Commission can also sue employers for civil penalties of up to $2500 per violation. Some states may also have laws which protect you in this situation.

If you think your rights under the FCRA have been violated, contact a local attorney and/or fill out an FTC Consumer Complaint Form.

Financial Information In Your Credit Report

Your credit report may contain:

  • non-sufficient funds payments, or bad cheques
  • chequing and savings accounts closed for cause due to money owing or fraud committed
  • bankruptcy or a court decision against you that relates to credit
  • debts sent to collection agencies
  • inquiries from lenders and others who have requested your credit report in the past three years
  • registered items, such as a car lien, that allows the lender to seize it if you don’t pay
  • remarks including consumer statements, fraud alerts and identity verification alerts

Your credit report contains factual information about your credit cards and loans, such as:

  • when you opened your account
  • how much you owe
  • if your debt has been transferred to a collection agency
  • if you go over your credit limit
  • personal information that is available in public records, such as a bankruptcy

Your credit report can also include chequing and savings accounts that are closed for cause. These include accounts closed due to money owing or fraud committed by the account holder.

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Can An Employer Deny Me A Job Because Of My Credit History

Pre-employment credit checks are a controversial topic, as not everyone believes them to be a fair evaluation of a job applicantâs fit for the role. Nonetheless, a potential employer can retract a conditional job offer based on what they find in the applicantâs credit history.

If this is the case, the employer must let you know that they chose not to hire you because of your credit history. In some cases, you may have an opportunity to appeal their decision by explaining the reasons for your poor credit.

If youâre starting your job-hunt, you should and review it before you receive any conditional offers. Review your credit report to find negative information that might exist and could trigger red flags to employers. Missed payments, accounts in collections, and other items may sway your potential employerâs hiring decision.

If you know you have bad credit history or no credit history at all, itâs best not to wait until a potential employer has reviewed your credit report to give your explanation. You should read your credit report beforehand to anticipate any red flags. Once you know that an employer may find some red flags on your report, it may be a good idea to give them some notice before you consent to a credit check.

Be sure to also explain what actions youâre taking to improve your credit â this will show the employer that youâre proactive, take responsibility, and are willing to put in the work to fix your situation.

How Employers View Your Credit Report

Does pulling your own credit reports lower your credit score?

Not every job application will include a credit check, as these details will be more relevant for some positions than others.

Your credit history is likely to be important, however, if youre seeking a position in which youll be overseeing other employees, dealing with financial transactions or managing company cash and accounts. However, some employers will have a policy of running background checks on all employees, no matter their role.

Employers will likely use your credit report and other background check information to verify the details you provided on your job application, such as your previous employment and experience. They also might consider your credit accounts generally, a positive credit history is taken as a sign of financial and personal stability, according to Glassdoor.

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Why Employers Check Your Credit Report

According to the 2018 report, over 50% of employers conducted , and the top reason for more than 85% of them was to protect employees and customers.

The credit report is a good tool to verify your background, identity, and education which are crucial components to prevent theft, embezzlement, and check your relationship with previous employers.

For employers, this check is an incredibly large picture of how you can handle your responsibilities.

Keep in mind that if an employer performs a credit check on you, they’ve probably decided to hire you and are trying to check whether you’re in financial distress.

As a tool for weeding out a massive chunk of potential applicants, employers are likely to use credit reports when hiring individuals for handling financial roles such as accountants or retail roles.


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