how credit affects employment

How Your Credit History Can Impact Your Job Search

Most consumers are aware that having a good credit report is extremely important if they decide to apply for a loan or mortgage. What many people don’t know is that their credit history can also be a determining factor in getting a job or promotion.

Federal laws allow potential and current employers to view a modified version of your credit report for purposes of hiring and promoting. This can be unnerving to people who have been unemployed or have a less-than-stellar credit history. In fact, there’s a push to outlaw pre-employment credit checks, and some states have already banned or limited them.

Job applicants also have rights when it comes to this practice. It’s helpful to understand your rights and how to work within them. The good news is that employers must have your prior written authorization before they can request your credit report, and the report they receive won’t include your account numbers, year of birth or references to your spouse. Furthermore, if you are denied a job because of a negative credit report, the company is required by law to give you a copy of the report along with a written description of your rights.

Many consumers are aware that multiple inquiries by creditors into their credit history can affect their creditworthiness if those inquiries are seen by potential lenders. However, credit inquiries made for employment purposes are considered “soft inquiries” and are not shown to lenders.

Why employers care about your credit report

To employers, your financial past provides a snapshot of your responsibility level, especially in industries such as defense, chemical, pharmaceutical and financial services. Jobs in these industries will almost always require a credit report on the applicant.

What to do if you’re seeking employment or a promotion

Before you begin a job search or a quest for a promotion, get a clear understanding of your credit history.

The Fair and Accurate Credit Transactions Act of 2003 (FACTA) gives U.S. consumers the right to a free copy of their credit report every year from each of the three major credit reporting agencies (Experian, TransUnion and Equifax). Take advantage of these options at If you want more detailed information, including your credit score or want to access your credit report more than once a year, you can purchase a comprehensive credit report at, containing details from the “big three” credit reporting agencies for a small fee. Take the time to scrutinize all information; in particular, check the accuracy of accounts, dates, addresses and spelling of names. If you find any inaccuracies, contest those entries immediately (this is another of your rights).

Negative information can sometimes show up on your credit report through no fault of your own. For instance, a divorce, layoff, or even a medical problem can cause events that result in a bad credit report. If you find yourself among the top applicants for a position, and you know your credit report is not top-notch, this is the time to be honest and disclose your credit situation to the employer. Honesty goes a long way, and many employers can be understanding and sympathetic if you explain the cause of negative credit information.

Employers want to have confidence in their employees, and your credit report can provide them with a glimpse at how you manage responsibilities, such as your own money. Understanding your credit history as it relates to your marketability in the job market can help you better position yourself as you conduct your job search.


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