EMPLOYERS ARE CHECKING YOUR CREDIT SCORE

When you’re looking for a job, you’re probably not thinking about your credit score. But you might want to start. Though many people argue that credit scores have nothing to do with their capabilities on the job, some employers say differently. 60% of employers recently surveyed by the Society of Human Resource Management said they run credit checks on all or some potential new hires. That’s up from 43% in 2006 and 25% in 1998.

Opinions on whether or not this is fair vary. Supporters of credit checks don’t think it’s any different than checking a candidate’s references. But opponents see it as unfair – especially in this economy – because of medical problems, divorce, or a job layoff and subsequent missed bills can wreck an otherwise perfect credit score in an instant.

So, why do employers look at your credit history? The reasons vary. Sometimes it can be because of the position to which you’re applying. Certain categories of employers such as banks, brokerage houses, government and other financial institutions regularly review credit histories. Evaluation of credit history is frequently applied to accounting and money management positions where there is potential for fraud and embezzlement.

Other employers look at credit histories in order to separate one candidate from another. Credit report information is a good data point when comparing and contrasting two or more candidates applying for the same position. If an applicant reports a significant level of personal debt or credit delinquencies those might distract that person from his or her job responsibilities.

Some employers use candidates’ credit histories to get a better idea of the person they are considering hiring. Relying on character references is becoming less reliable than verifying records. Credit checks can verify demographic and location information and will include identifiers such as name, spouse, Social Security number, alias, address, phone and previous employment. A credit report can provide a snapshot of a person’s economic life that may confirm or contradict the resume.

For example, if someone claims they made a good six-figure income for the last 10 years, yet they show repeated credit problems during that period, they could be lying about their income or just be poor money managers. They could also have major financial issues draining their resources and any of these might have a negative effect on their job.

Job seekers do have rights, though. The Fair Credit Reporting Act governs almost all issues related to the use of credit reports. Job applicants have the right to a copy of their credit report, and the law requires the hiring entity to provide a copy to the job applicant. In addition, if an employer decides not to hire a candidate based on the results of a credit report, the candidate must be told the reason why and be provided with the credit report information.

EMPLOYERS ARE CHECKING YOUR CREDIT SCORE

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