Is It Fair for A Potential Employer to Check Your Credit Report?

Many employers look at the credit reports of people they are thinking of hiring. See four steps to take to present your credit history in the best light during a job search.
By Richard Barrington

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Q: I just interviewed for a job and it went well. The potential employer said the next step is to check my references and my credit report. Why my credit report? Is that even fair? I had some credit problems a few years ago, and though I've worked to improve it, I'm sure there are still some issues there. Why should that count against me getting a job?

A: Checking a credit report is a fairly common, though still somewhat controversial, part of the hiring process for many companies. Whether you agree with it or not, here are three reasons why a company might want to review the credit history of prospective employees:

  1. To see what it says about how you handle responsibility. Companies that extend credit, such as credit cards, rely on people to pay it back. What is an employer to think if they see someone has consistently blown off that responsibility?
  2. To anticipate a potential source of distraction. People in serious credit trouble spend a great deal of time fending off people they owe and trying to solve their financial problems. If you were an employer, is that what you would want to be foremost in an employee's mind?
  3. To flag potential security risks. If a job involves financial responsibility, an employer is going to want to know whether an employee is under pressures that would make them especially vulnerable to temptation.

In this case, you know that this potential employer intends to look at your credit report. In general, anyone looking for a job should consider it a possibility.

4 things job seekers should do with credit reports

Here are four steps to take for your job search to better deal with credit issues you may have:

1. Check a recent copy of your credit report

If interviewers are going to be looking at your credit report, you should at least see what they are seeing. You mention having had problems in the past. You need to know which of these are still reflected on the report. In the process of discussing your credit history, you don't want to resurrect issues that have already dropped off your credit report.

2. Fix any credit errors

Errors happen, so get them cleaned up before anyone gets the wrong impression.

3. Submit an explanation of negative marks on credit history

If there are legitimate negative issues on your credit report, you have the right to attach a 100-word explanation of them. Don't try making excuses for everything though. Just point out things that occurred because of unusual circumstances that are not likely to be repeated. Also mention steps you have taken to rectify the problem.

4. Meet the credit issue head on

Whatever credit mistakes you may have made in the past, you should address them openly with any potential employer who asks for permission to view your credit report. You need to demonstrate that you have taken responsibility for your mistakes and have changed your ways.

Chances are, the credit report is not a primary determinant of whether someone gets hired or not. Instead, it is just a piece in the mosaic of things employers consider when evaluating talent.

Comment: How do you feel about employers checking job applicants' credit reports?

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