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Will Prospective Employers Check My Credit?

Will Prospective Employers Check My Credit?

• Updated: May 23, 2016

If you saw your credit score tank after the recent recession, don’t worry, you’re not alone.  Many people experienced significant declines in their credit scores following the economic downturn. Still, you’re probably wondering, “Will prospective employers check my credit?” 

Unfortunately, this type of credit check is not just the stuff of urban legends.  Yes, there are some companies that perform credit checks of job candidates.  However, the good news is that less than half of all companies do credit checks and of the ones that do, most only do them for positions in finance or data security.  Furthermore, they aren’t viewing your credit score.  Instead, they’re looking for red flags in your financial history that would suggest that you mismanage money or can’t be trusted with sensitive financial data.   
Keep Reading: What you need to know about your credit score

Of course this leads to the question, “Is this legal?”  In most states, the answer is yes.  However, there is pending legislation in a number of states to prohibit this practice.  Ten states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington) have already passed laws preventing employers from pulling credit reports or restricting how they can use them in hiring decisions. 

While a lot of job seekers are inclined to worry about this step in the hiring process, we encourage you to breathe easy:  your credit score won’t be impacted by any employer checks, an employer must get your written permission before obtaining your credit report, and the vast majority of HR professionals (80%) report that they’ve hired job candidates with negative credit histories.  

Furthermore, if you do have bad credit, there are things you can do to reduce the risk of being rejected for a job based on your credit history.  We recommend that prior to conducting your job search, you obtain copies of your credit reports from AnnualCreditReport.com and correct any errors.  Roughly 20% of people have incorrect information on their credit reports.
Keep Reading: How to handle credit report errors

Having done that, be aware that most credit checks are done in the final phases of the hiring process.  So, experts suggest that you be proactive and let an employer know before they pull your credit report about any adverse items and how you’re working to resolve them.  Employers will appreciate your honesty and be far more likely to disregard your negative credit. 

Lastly, don’t over think it!  While you want to take steps to reassure your future employer, you don’t want to give the impression that the credit check has you sweating bullets.  Instead, remember that your job history and skill set make even a poor credit history easy to overlook.

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