This post is sponsored by Lexington Law.
Did you know that your credit report could cost you a job offer? For a long time, I didn’t know that either. What relevance does your credit report have to your ability to perform job duties?
If I’m honest, I can’t remember when I got my first credit card. It was probably in college, because in high school I was only allowed a debit card. Outside of student loans, my first big borrowing event was when my husband and I bought our first house after college.
We knew that in order to get pre-qualified to buy a house, a lender would check our credit score, income, etc. to determine what amount we could borrow. Most people are aware that their credit report will be examined when they buy a high value item on credit.
What a lot of people don’t know though, is that your credit report can be pulled by a potential employer and can be factored into their hiring decisions. A less than stellar credit report could cost you a job offer! I absolutely did not know this when I was searching for my first full-time job.
Did You Know Your Credit Report Could Cost You A Job Offer?
When I graduated college and was hunting for my first full-time job, I had my resume reviewed, updated my online networks, purchased interview wardrobe, and did my research on companies I was interested in. The furthest thing from my mind was my credit report.
A 2016 CareerBuilder Survey found that 72% of employers do a background check before hiring, while 55% conduct drug tests and 29% did a credit check.
Are you surprised? Granted, 29% isn’t a majority of employers, so there’s a good chance you may never have a potential employer check your report, but wouldn’t it be a shame if the one that does check is for a job you really want?
Why Do They Check?
For those employers that do check your credit report, be assured that they aren’t looking to see if you are likely to buy a new car or house. In fact, the reason they check is often to prevent theft and reduce liability in hiring.
Employers who are hiring for roles that require security clearance or deal with sensitive financial information are more likely to check your credit report. They are looking for people who may be looking to get hired so that they can steal from the company. They may also be looking for discrepancies in what you have represented on your resume and in interviews.
Employers may check to see your history of making payments, from the standpoint of determining if the person they are hiring is reliable, organized, and in command of their responsibilities.
It’s important to note that not all US states allow employers to check an applicant’s credit report. As of 2015, the National Conference of State Legislatures reported that 11 states limited the use of credit reports among employment. Make sure to check on your state’s laws that may or may not allow this.
What Do Employers See On Your Credit Report?
The good news is that even in states where employers are allowed to check your credit report, the report they receive is limited and contains less information than lenders receive.
Employers don’t see account information, but they do see history of payments, total debt and your available credit. They do not see your credit score. They also don’t see information that can be used to discriminate against you in hiring, such as birth date or marital status.
Your Rights As A Job Seeker
Before you start calling your senators to change legislation around hiring, let’s talk about your rights.
According to U.S. News, there are a few important notes you should be aware of about this practice.
First off, this credit pull by potential employers does not impact your credit score. It’s a “soft pull”, which is much like what impact you checking your credit score would have.
Second, you have to give consent to allow a potential employer to pull your credit report. You will know if they are looking.
Last, NerdWallet reported that you must be notified if your credit report was a factor in rejecting you as a hire, which is known as a pre-adverse action notice. This gives you time to explain or elaborate on anything present on your report. Further, if the employer continues with that reason for rejection, they must send a post-adverse action notice with additional information.
Why is this so important? Credit reports can contain errors. What can be terrifying to some who aren’t aware that potential employers can pull your report is that they didn’t know there were errors on their report until it was too late.
Here’s How To Avoid Losing A Job Offer Because Of Your Credit Report
This post should help prevent you from ever finding yourself in this terrible situation. I can’t stress enough the importance of checking your credit report for errors. There are literally zero excuses not to do this.
Your credit report is free and available to you. All it requires is your effort. Contact Lexington Law to get a copy of your TransUnion report summary. If you are in need of repair or suggestions to improve your report, Lexington Law can help guide you to the solutions!
If you are anything like me, your credit report doesn’t come up in daily conversations with family, friends or coworkers. The reality though, is that we need to give appropriate attention to what our credit report says about us.
Not only will you be relieved when you go to make your next large credit purchase because you checked your credit and made repairs where needed, but you can also avoid the massive mistake of losing a job offer because your report isn’t clean.
This post is the first of four summer #adulting series posts, which will walk you through what you need to know in order to take care of your financial health.
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