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Restrictions on Employer Credit Checks

If you are in the job market, or are thinking about applying for a different job, are you afraid that your credit score may prevent you from getting hired? Many employers do check credit reports of potential hires to get a better idea of what kind of person you are and how you operate. But let's take a look at what employers really see.

Employers don't see your credit score

While employers are authorized to see your credit report, they are not permitted to see your score. When employers request a credit report, the bureaus will send a variation specific to employers. It is a different version from what lenders and other creditors would see. The main difference is the credit score is omitted.

Access regulations

The Fair Credit Reporting Act is the piece of Federal legislation that regulates who can see your credit report information. Certain restrictions are placed on employers who use this info to screen job applicants.

The first restriction is employers are not authorized to see your credit report without your permission. If an employer feels strongly about screening credit reports prior to hiring and you refuse to give consent, you will likely kill your chances of getting that job.

However, if you do grant access and you don't get hired based on your poor credit status, the employer must provide you a copy of your credit report for you to review to see if there is anything that can be contested. If you can identify any mistakes, bring these to the employer's attention and you may be reconsidered for the position.

In addition to the Fair Credit Reporting Act, some state governments have also placed stipulations on employment background checks. A few states have even banned employers from pulling credit reports.

What employers are actually looking for

Your credit report says a lot about you. How you handle your financial obligations gives employers an idea of how you generally operate. Money management skills cross over into other areas of your life, including work ethic. However, that's not what employers are focusing on. They are looking for things that may increase their risk if they hired you. They need to protect themselves and their company against unethical or illegal activities. Negative public records and other derogatory marks often insinuates untrustworthy behavior.

This goes especially if you are applying for government, teaching, medical or any other position that requires you to deal with sensitive information, minors or money. If an employer hires someone who gets caught engaging in illegal or unethical behavior, it is the employer who will pay. So it makes sense why he/she would take extra measures to protect him/herself.

What you can do

Even if your credit isn't in the best shape, go ahead and apply for the job anyway. What's the worse that could happen? You don't get the job. While you are taking measures to clean up your report, maybe look for other employers who don't do credit checks. The most important thing is to do your best to keep your credit in good shape by paying your bills on time, keeping your credit utilization ratio low; basically engaging in responsible money management. Make sure you are also checking your credit report on a regular basis. You want to be sure everything is being reported as it should be. A good way to do this is by enrolling in a credit monitoring program. The company will notify you of any changes and gives you access to your report and score on a monthly basis.

Employer credit checks may soon be a thing of the past

With growing regulations on employer access to credit reports, more employers are losing interest in this aspect of the job screening process. In fact, the time may soon come where employers won't have access to, or choose not to access, your credit report. But until then, there are things you can do if a credit check is a mandatory part of your job interview. Plus, having healthy credit impacts many other aspects of your life besides employment, so do everything you can to keep it healthy.