Credit Checks on the Job

How do you feel about your boss getting a peek at your credit history? If you're looking for work it's very possible you'll be asked to share that information in order to get the job. 

But there's a move underway across the country to stop that from happening. Even congress is considering the controversy. 

Job hunter Lauren Beer has experience; she has skills, she has advanced degrees from prestigious universities.

But she also has not so great credit, and she says it is costing her job opportunities.

"It makes me very angry," said Beer.

Lauryn is finding out the hard way that employers care about your credit. Some even require credit checks as part of the application process. But not everyone agrees with the policy.

A new survey by credit.Com reveals more than half of Americans are against employers getting a look at your credit when considering you for a job.

"There are millions of people out of work, suffering and depression are on the rise. Why in god's name are we putting another impediment in the way of job seekers?"

The issue is getting national attention. 

There's a bill in congress which would prohibit the use of credit checks when it comes to making a hiring decision, with a few exceptions.

That includes people applying for a national security position or a job where they'd handle large amounts of money.

Representative Steve Cohen proposed the legislation, saying these credit checks are creating a vicious cycle that's impossible to get out of.

"You don't have a job, you lose your house, you have your medical debt and before you know it your credit rating is gone in no time. People who want a job are being denied through no fault of their own," said Rep. Cohen.

The real question?  Does bad credit equal bad employees?

Studies are mixed. 

Still, James Ratley with the National Association of Certified Fraud Examiners sees a need for credit checks to protect companies.

He says the association's research shows the wrong employees can be devastating to an organization.

"When someone is having financial difficulties themselves they are much more inclined to take money that does not belong to them. Employee credit checks for potential employees are a vital part of the hiring process."

That said, everyone agrees that bad credit is becoming more common in this economy and could be caused by a number of things that may not be in your control, from death of a spouse to identity theft, or even mistakes on your credit report.

If that's the case, be prepared to explain it.

"I think people need to know up front that if an employer may look at their credit records and if there's something in there they're concerned about they may even want to consider raising that during the interview," said Ruth Susswein with Consumer Action.

Keep in mind the employer cannot see your credit report without tour permission.  You have to authorize that.  But deny them and tour application may not make it to the next step.
So what can you do to still get that job?

Credit experts say before you start applying be proactive!
  • Request your credit reports
  • Fix any errors
Because if you're not prepared, credit.com's Adam Levin says...

"It could end up costing you a job." 

It's important to note the employer would get a different kind of credit report than the one that includes your actual score.
The employment report includes your credit payment history and other credit habits.

There are also bills pending in more than 20 states across the country and four states have already restricted the practice.

U.S. residents are allowed to get a free copy of their credit report each year.

An employment background check often includes a copy of your credit report.

The three major credit reporting agencies (Experian, Transunion, and Equifax) provide a modified version of the credit report called an "employment report."

An "employment report" includes information about your credit-payment history and other credit habits from which current or potential employers might draw conclusions about you.

An employment report provides everything a standard credit report would provide; however, it doesn't include your credit score or date of birth. Nor does it place an "inquiry" on your credit file that may be seen by a company looking to issue you credit. Having too many credit inquiries tends to lower your credit score.

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