Why Do Employers Check Your Credit Report Before Hiring?

Written by MBC Posted on . Posted in News.

An employer may want to review your credit report as part of the hiring process. Whether or not an employer wants to do it depends on the job you’re trying to get and the industry it’s in. If you are applying for a job where you will handle money, credit cards, or have access to financial funds or data, you will likely have your credit checked. In any job where the employer feels a credit report is relevant to the job, they may try to get one as part of your background check.

However, your credit probably won’t be an issue for jobs where you don’t handle money or access any financial data. But if your credit is checked and you have bad debt, it could prevent you from getting the position you are applying for. A debt is generally considered a bad debt if the balance is more than 60 days past due or if you have a debt that a creditor has returned for collection or has written off. If an applicant has a bad debt greater than 10% of the salary of the job they are applying for, it can be considered a risk, regardless of the age of the debt. Although debts over five years old, resulting from student loans or major medical care for an immediate family member, are generally not considered a risk.

Employers should ensure that there is a good business reason for requesting a credit check on a potential employee and that the credit check is relevant to the position being offered. They should also check state and local regulations to ensure that a credit check is an authorized part of the hiring process. Employers should also make sure they have a policy stating when credit checks will be used in the hiring process.

It’s a good idea to ask yourself why a credit check is used as part of the hiring process. A credit report contains a lot of private information, and some employers are known to abuse this information. Information in a credit report may be used to discriminate against an applicant. Also, keep in mind that federal bankruptcy law does not generally allow the use of a bankruptcy filing to make a hiring decision. Additionally, it’s okay to ask an employer why they’re getting a credit report, and they should be able to give you a clear reason.

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