Errors To Watch Out For On Your Credit Report
Once you get your report, check for:
- mistakes in your personal information, such as a wrong mailing address or incorrect date of birth
- errors in credit card and loan accounts, such as a payment you made on time that is shown as late
- negative information about your accounts that is still listed after the maximum number of years it’s allowed to stay on your report
- accounts listed that you never opened, which could be a sign of identity theft
A credit bureau cant change accurate information related to a credit account on your report. For example, if you missed payments on a credit card, paying the debt in full or closing the account won’t remove the negative history.
Negative information such as late payments or defaults only stays on your credit report for a certain period of time.
What To Do When An Employer Wants Your Credit Report
If youre in the market for a job, you may be aware that some employers run credit checks before they decide to hire an employee.
The idea behind this credit check is that employees who are financially responsible will also be responsible at work, and that those who are in financial straits may be more likely to steal or make other bad choices. Whether or not this is actually the case , running credit checks on job applicants is actually a fairly common practice. Heres what you need to know about them.
There are credit reports that are designed specifically for potential employers to use. They contain much of the information that is found in credit reports pulled by potential lenders, except they do not show your account numbers, date of birth, or references to your spouse. Your credit score is also not included in these reports.
The reports will contain basic personal information , other names youve used , information on public records like bankruptcies or liens, and your credit history. These reports also include work history and basic employment information.
Also, employment credit checks are a soft pull on your credit, meaning they wont affect your credit scores.
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Can My Credit Prevent Me From Getting A Job
A bad credit history could hurt your chances of getting a job, especially if you’re applying for a role in finance or management or a job with the government that includes security clearances.
That said, 47% of employers in the U.S. don’t run a credit check on any employee candidates, according to the NAPBS. Also, many states and municipalities have laws against employers using an applicant’s credit history against them.
If you’re thinking of applying for a job, talk with the hiring manager to find out what’s involved with the background check process, so you can know what to expect.
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Understand Your Credit Report
Your credit history is important to a lot of people: mortgage lenders, banks, utility companies,prospective employers, and more. So its especially important that you understand yourcredit report, credit score, and the companies that compile that information, credit bureaus.This brochure provides answers to some of the most common, and most important, questionsabout credit.Your Credit Report
Q:What is a credit report?
A: A credit report is a record of your credit history that includes information about:Your identity. Your name, address, full or partial Social Security number, date ofbirth, and possibly employment information.Your existing credit. Information about credit that you have, such as your creditcard accounts, mortgages, car loans, and student loans. It may also include theterms of your credit, how much you owe your creditors, and your history of makingpayments.Your public record. Information about any court judgments against you, any taxliens against your property, or whether you have filed for bankruptcy.Inquiries about you. A list of companies or persons who recently requested a copyof your report.
Q: Why is a credit report important?
Q:Who collects and reports credit information about me?
Q:Where do credit bureaus get their information?
How Does Information Get On My Credit Report And Is It Updated On A Regular Basis
When you have an account with a lender, theyll typically submit account updates to at least one of the three major credit reporting agencies TransUnion, Equifax and Experian. Since lenders dont always report to all three agencies, the information on your credit reports may vary.
Its also important to note that lenders report at different times of the month, so you might see slight differences in your reports, and therefore your credit scores, at any given time.
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Faq: What Is A Credit Check On An Employee
Many employers conduct thorough background checks as part of their recruitment and hiring process. Running a credit check on an employee before extending a job offer is an additional hiring practice for several businesses. Job seekers should prepare for this possibility and understand what an employment credit check entails.
In this article, we explain what an employment credit check is, describe why employers run a credit check on employees and answer other frequently asked questions about credit checks.
Employers Want To Know That You Are Prepared For What Matters
However, if youre looking for a job, particularly in the industries where credit checks are more common, like banking and accounting, you should check your credit report for negative information that could be a strike against you. GOFreeCredit offers affordable credit reports and credit monitoring.
Even if youve been responsible with credit, you might find mistakes on your report that are hurting your credit. You dont want to be surprised by this information after youve applied for a job. Checking your report before a job search may give you time to report and dispute credit report errors with the credit bureaus and your creditors.
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What Are Credit Checks
A pre-employment background check is a critical piece of the hiring process. Most background checks consist of criminal history, education, previous employment verifications, and reference checks.
Credit checks for employment purposes are typically conducted through one or more of the three major U.S. . Employment credit checks dont include a credit score, nor do they count as a formal inquiry against your credit report.
Employers Check Credit History Not Credit Score
There are plenty of reasons employers might check a job candidates , and about half of the organizations surveyed by the Society for Human Resource Management in 2012 reported that they conduct credit checks. Only 13 percent conduct checks for all candidates, though 34 percent conduct credit checks on select candidates.
Before diving into all the reasons why employers might check your credit, though, its important to understand what theyre really checking. Employers look at job candidates credit reports not their .
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How Do I Remove My Employment History From My Credit Report
You can request that the employment listing be removed from your report by going online to dispute your credit report information. Simply follow the steps in the online process to dispute the employer listing. Your personal report will also include a toll-free telephone number you can call for assistance.
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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Does An Employer Credit Check Hurt Your Score
Businesses may get an employer credit report from one of the three major credit reporting bureaus Equifax, Experian and TransUnion or may use a specialty screening company.
The credit check counts as a “soft inquiry” on your credit, so it wont take points off your credit score, the way a credit card application might.
The credit reports also wont show other soft inquiries on your credit, so potential employers wont be able to see if other employers have checked on you. But you will be able to see the soft inquiries if you request your own credit report.
Why Would A Potential Employer Check Your Credit Report Ask Hr
Johnny C. Taylor Jr. tackles your human resources questions as part of a series for USA TODAY. Taylor is president and CEO of the Society for Human Resource Management, the world’s largest HR professional society and author of “Reset: A Leaders Guide to Work in an Age of Upheaval.
The questions are submitted by readers, and Taylor’s answers below have been edited for length and clarity.
Have a question? Do you have an HR or work-related question youd like me to answer? Submit it here.
Question: In going through background checks, I have seen credit listed in some requests. Do employers look at your credit report in the hiring process? How is credit information relevant to employment matters? Melvin
Johnny C. Taylor Jr.: Employers may find credit information relevant in certain instances. Depending on the role or industry you are seeking, an employer may include a credit report as part of your background check for the position.
While I cant speak to the exact circumstances youre facing, careers where responsibilities would include handling credit cards, cash or other company funds may warrant a credit check. Positions such as financial officers who have access to financial data or funds and have authority over managing large sums of money will likely require a credit check.
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How Employers View Your Credit Report
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 Does An Employer Care About My Credit Score
What looking at and where we typically see a credit check is if youre applying for a job where youre managing a companys money, says Rod Griffin, senior director of public education for Experian, one of the three major credit bureaus. They want to be sure youre managing your own well.
Its not only positions that involve financial or fiduciary responsibilities that might involve a credit check, though. There are other categories of employers that may want to review a candidates credit.
For instance, for a business dealing with high-end merchandise like jewelry, a solid credit report can demonstrate that the person is financially stable and therefore less likely to be tempted to pocket merchandise, says Laura Handrick, an HR and tech strategy consultant.
Along those lines, if youre vying for law enforcement positions, government agency positions, or any roles that grant you access to other peoples personal confidential information, you should expect a credit check.
In some cases, the employer isnt so much concerned with your finances as they are with sniffing out application fraud. Theyll use the credit report as another way to verify that you are who you say you are, says Griffin. This might be utilized more for jobs with high-risk operations, such as government jobs or work requiring security clearance.
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Is There A Place Where I Can Explain Some Of The Negative Information On My Credit Report
Absolutely. You have the right to attach a 100-word explanation , called a consumer statement, to your credit report. It can be used to explain why, for example, you have a few late payments on your report. Anyone who looks at your credit report will see this statement. You can add your consumer statement online.
Employers Wont Rule You Out Because Of Bad Credit
Employers dont make hiring decisions based solely on a credit background check, Yost said. So if theres negative information on your report, that doesnt mean you wont get the job. Not everything that is negative on your credit report is necessarily a negative to you, he said. In fact, 80 percent of organizations surveyed by SHRM reported hiring a job candidate with negative information on a credit report.
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Looking For A Job Check Your Credit Report First
Companies often rely on them for hiring decisions, but yours could have errors that prevent you from getting an offer. Heres how to get ahead of a problem.
Two years ago when Emma Alda was offered a new job in accounting, contingent on passing her background and credit check, she was so excited and confident that she didnt think twice about giving two weeks notice to her then-employer.
So Alda was surprised and devastated when she heard back from the new company that there was a problem with her credit report so significant that it put the offer in jeopardy. She thought there had to be a mistake.
Turns out, Alda was right: One of her credit reports showed that a local hospital had made a hard pull credit inquirythe kind done when you apply for a loanalmost a dozen times, when she had merely applied for a payment plan. It was the hospitals error. But by the time Alda identified the problem and got it fixed, the damage was done: The company had already hired someone else.
I never would have thought that anything would come up preventing my position from being secured, says Alda, a mother of three who now faced unemployment. I had already received the job offer in writing.
Errors on credit reports appear to be on the rise, as complaints about them to the Consumer Financial Protection Bureau more than doubled between 2019 and 2020.
Associate director at Demos, a policy and research organization
How Does Equifax Know My Employer
The employment information on your Equifax credit report is provided by you or by your lenders and creditors. Employment information is typically reported from credit applications and is not regularly updated. This information is not used by lenders, creditors or employers in making their decisions.
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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 cant 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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Bad Credit Doesnt Mean A Bad Employee
One problem with the use of credit reports in employment screening, consumer advocates say, is that they werent developed to predict how well a person might perform in a certain joband no one CR spoke with is able to produce a study or data that suggest otherwise. Yet employers often rely on credit reports when hiring for all sorts of jobs, says Amy Traub, associate director at Demos, a policy and research organization, where she focuses on consumer financial issues. Traub has testified before state legislative bodies on this topic.
For example, Traub says her research shows that companies check credit reports when hiring in information technology, for those who drive delivery trucks, and even for dog walkers.
We know credit reports were developed to help lenders assess risk on a loan, not to help choose a dog walker, Traub says, yet theyve been marketed by credit bureaus and background screening companies as a way to evaluate a persons character and trustworthiness. But, she says, a credit report is not a crystal ball.
The practice is so questionable that almost a dozen states heavily curtail it in most circumstances, according to research at Demos. For example, in Colorado, the law limits what credit information companies may request unless its substantially related to the employees current or potential job, including jobs at banks or other financial institutions, in law enforcement, or that entail handling financial information.
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