Employers and Your Credit Score and Credit Report: What You Need to Know

We’ve said it before and we’ll say it again: When it comes to your financial potential, other than what’s already in your bank account, there’s arguably no greater influencer than your three-digit FICO score. A good credit score will get you approved for loans and credit cards at the lowest available interest rates, while you risk even being approved at all if your credit is in poor shape. And being that very few people can pay out-of-pocket for their homes, cars and more, it behooves you to invest the time and effort into either repairing your score if it’s scuffling or maintaining it if it’s already in good shape.

As we noted, credit scores most often enter the conversation when you’re applying for a loan or opening up a new line of credit, but there are other instances where they may come to fruition as well. One is when you’re applying for a new job.

Credit Scores and Reports, and Your Employer

Typically, when you’re applying for a new job your focus is on updating your resume, writing an engaging cover letter and fine-tuning your interview responses. Employers, on the other hand, are likely doing their homework beyond just viewing your experience and checking your references. In some cases, they may be doing a background check on you — and this background check may involve viewing your credit report. In fact, it’s estimated that up to 95 percent of employers do some sort of background check on would-be employees, and over 15 percent of these background checks involve viewing some sort of financial history.

Now, there’s an important factor to note in the above paragraph — and that’s how an employer can view your credit report. Not your credit score. This means they won’t be able to see that three-digit number that holds so much financial potential, but they will be able to look at your credit history as detailed in your report. Credit reports contain information that includes credit history, account information, balances, payment history and more. So, while they won’t be able to see your credit score by viewing your credit report, they can probably take a pretty good guess at what it is based on the information in your report.

Why Check Credit Reports?

So, why would a potential employer want to view this information before making a hiring decision? Basically, it’s because they want to know how much of a potential risk they’d be taking should they make you a job offer. Since a credit report can still offer a glimpse into an individual’s financial situation, many employers see value in checking to see whether or not you are fiscally responsible before extending a job offer. Some may even think that if you’re not financially responsible, that you may not be responsible in the workplace.

The good news is that if an employer is checking your credit score, it’s likely because they’ve already made the decision to make you an offer, and are checking off the last box just to further verify their decision. This is often the case because there’s a cost to employers who want to check this information. Furthermore, you’re more likely to be subject to a credit report check if the position you’re vying for is anything money or financially related.

Employer Credit Report Checks: Other Things to Know

We already told you how a credit report is not the same thing as a credit score, but there are a few other things you should know about when a potential employer pulls your credit report:

  • It won’t hurt your score. Pulling a credit report is similar to a soft credit pull.
  • You must give the employer your written consent to do so. Otherwise, it’s a violation of the Fair Credit Reporting Act.

Finally, we recommend pulling your credit report at least once a year (you’re entitled to one free report from each of the main credit reporting bureaus annually). This way, you know what’s on your report and can dispute inconsistencies in a more timely manner.

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