When individuals receive an offer for a new job, many employers will make the offer contingent on a satisfactory background check. Many employers include a check of your credit report as part of their standard background check. What does this mean for those applying for a new job in a competitive employment environment?
For employers checking a candidate’s credit report as part of their background check, the three major credit reporting bureaus (TransUnion, Equifax and Experian) issue a modified version of their standard credit report known as an “employment report”. The employment report includes details about your credit history such as whether you regularly pay your bills on time, whether you have any delinquencies or liens or have ever declared bankruptcy, and other information that might be of interest to a potential employer.
Potential employers have determined that instances of late payments or other negative marks on a credit report may raise questions about a job candidate’s judgment which may be relevant to the decision as to whether to hire that particular candidate.
While the employment credit check includes most of the elements common to the credit report you can obtain from the three major credit reporting bureaus, the employer report does not provide your credit score or your date of birth. Like the consumer credit report, the employment report does not count as a credit inquiry for purposes of determining number of credit inquiries, an important factor in calculating your credit scores.
The Fair Credit Reporting Act (FCRA) requires that employers notify you before ordering your credit report as part of a background check. If you are denied a job because of negative information contained in your employment report, the prospective employer must notify you of that adverse action. The notice must tell you the name, address, and telephone number of the company that provided the credit or other background information that led to your being denied the job, and explain your right to dispute the accuracy or completeness of the credit report information. You are also entitled to obtain a free credit report from the company that supplied the credit or other background information within 60 days of your being turned down for the job.
Some states have enacted laws that limit or even prohibit the use of credit reports by potential employers. Colorado, California, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington forbid employers from using a candidate’s credit report in hiring decisions. The laws provide for various exceptions such as positions in management, law enforcement or with the Department of Justice, jobs where the candidate will have access to personal, financial or proprietary information, or will handle large amounts of cash, or jobs where the employee would be a named signatory on the employer’s bank or credit card account. California requires that employers requesting a job applicant’s employment report provide the applicant with written notice of the specific reason for requesting the report.
Errors in your credit report can have a negative impact on your ability to land a new job. You should order your credit report, examine it carefully for inaccurate information, and clean up potential errors prior to completing a job application or submitting a resume.
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