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Why Do Employers Look at Your Credit Report? |
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The number of employers that are using credit histories to decide which people to hire has increased dramatically in recent years. Many people are confused about why a potential employer wants to know the details of their financial situation. After all, when you pay your Citibank credit card bill has no bearing on how good of a manager you will be, does it?
Actually, there is a lot of information that can be gained from reading someone's credit report.
One of the main things that employers check for is how responsible the candidate is with money. So if you are a manager dealing mainly in communications, it may not matter when you pay that Citibank credit card bill. But if you are managing a division’s finances, things like bankruptcies, accounts in collection, aliases, liens, and habitual late payments may be seen as red flags.
Some of your employment history ends up on your credit report as well. Employers may check your resume for honesty and accuracy. Many employers don't want to hire someone who jumps around from job to job.
It's most common for employers to look at a credit report if they are hiring someone who will handle money at work. How liberally do you use that Citibank credit card? Do you segment your credit card use by using one card only for gas and another only for business? Do you pay off the entire balance? In addition, if you start a position with a lot of debt, you may be viewed as being a high risk for employee theft or embezzlement.
While people’s past behavior often dictates what they will do in the future, this brand of background checking makes things difficult for an individual who is ready and willing to make changes in their life. You may be an excellent worker but if you are bad at managing money or experienced unfortunate and uncontrollable circumstances, you could be shuffled to the bottom of the resume pile. As it becomes more common for employers to check credit reports, people in certain fields will need to consider their financial histories as they plan their careers. In short, if your Citibank credit card is past due, get paid up before you apply for a new job.
Many people feel that isn't right or fair for potential employers to be able to check their credit reports. Some see it as an invasion of privacy. The important thing to remember is that an employer can only look at your credit report if you give them written permission to do so. This is usually included with background check forms in the hiring process. Read everything carefully and decide whether or not to sign, but be aware that failing to do so usually takes you out of the running for a position.
Another important thing to realize is that employers don't get the same version of a credit report as a bank or the individual would. They get what is called an “employment report,” which has less information on it. Personal details such birth date and marital status are taken off so they can't influence hiring decisions.
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