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Your credit report could interfere with your job search. Here’s what you need to know

These days, your credit history is almost as important to your personal finances as your bank accounts. This is because it can impact everything from your ability to get a loan to your ability to find a job. Yes, it’s true: your credit can have an impact on your job search.

One of the most common job search myths is that your potential employer can see your credit score. If you have a low score, it can definitely cause anxiety.

The good news is that employers can’t see your credit scores. However, there’s also bad news: Employers can check your credit reports, or at least a limited version of them. And, depending on the employer – and what they find – your credit history could lead to a denial letter.

What your potential employer can actually see

Employers can’t see your credit scores and don’t get the same version of your credit reports as lenders. But they still receive a fair amount of information about your financial situation.

An employer version of a credit check may include your:

  • name
  • Social Security number
  • Address
  • Current debts
  • Payment history

In most cases, your potential employer probably already has your personal information such as your name and Social Security Number (SSN), which is often needed to complete the background check in the first place. Other than your SSN, personal information on your credit reports is available through a basic background check that includes a search of public records.

So really, it’s your current debts and payment history that form the crux of the report. This can include mortgages, auto loans, personal loans, or credit card accounts. Your credit reports will show the last balances reported, as well as whether you are up to date with your payments.

One thing to note is that employers – and potential employers – need your consent to check your credit. Many companies will include this as part of the initial job application.

Some industries may care more than others

How much weight an employer places on your credit history – or even whether they check it – can vary widely by industry and company. For example, if you’re looking to work at a local drive-thru service, your credit card debt probably isn’t an issue.

However, if you are applying for a job with a bank or credit bureau, your credit history could have a big influence on the hiring decision. After all, if you don’t consistently manage your own finances, a company may not want to hire you to manage theirs. Excessive debt can also be a red flag in some security-sensitive jobs, as some employers may think those with excessive debt are more likely to be manipulated from the outside (such as bribery).

If a business plans to reject your application based on your credit check, they are required by law to notify you – in writing – that they are taking “adverse action” because of your credit. The company is also required to send you a copy of your report so that you have the opportunity to dispute any incorrect information.

The best ways to clean up your credit reports

You have three major credit reports, one from each of the three major credit bureaus: Experian, Equifax, and TransUnion. You are normally entitled to one free credit report from each bureau each year, although you can get weekly reports until April 2022 due to the pandemic. You can access your free reports at AnnualCreditReport.com. (The site is secure and managed by the credit bureaus.)

As long as your credit history is in good shape – that is, you don’t have late payments, maxed out cards, or defaulted accounts – you probably don’t have to worry about knowing if an employer verifies it. However, if your credit history is not at its best, you may be able to clean it up.

The first thing to do when checking your reports is to make sure everything is there. If you do not recognize any accounts or if there are other errors in your reports, you can file a dispute with the credit bureau to have the information corrected. You will need to file a separate dispute for each incorrect item with each office.

If the problematic items on your credit reports are legitimate (in other words, if you really missed that payment, or if you missed that account), you won’t be able to get them removed through litigation. Instead, you might just have to wait for them to age your intercourse. Most negative items will automatically disappear from your credit reports after seven years.

While you are unlikely to lose most jobs due to your credit history, it is good to know where you are at and the potential red flags you may be facing. And, given the importance of your credit to your finances in general, this is information you should have even when you are not actively looking for a job.

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Jennifer R. Weller

The author Jennifer R. Weller