Why Do Employers Check Your Credit Report Before Hiring?

It’s possible an employer may want to look at your credit report as a part of the hiring process. Whether or not an employer will want to do this depends on a job you are trying to get and what industry it is in. If you are applying for a job where you will be handling cash, credit cards, or have access to any financial funds or data, you will probably have your credit checked. In any job where the employer feels a credit report is relevant to the job, they might try to obtain one as part of your background check.

However, your credit will probably not be an issue for jobs where you are not handling any money or accessing any financial data. But if your credit is checked, and you have a bad debt, it could keep you from getting the position you are applying for. A debt is generally considered to be a bad debt if the balance is more than 60 days past due, or if you have a debt that a creditor has referred for collection or has written off. If an applicant has a bad debt that is larger than 10% of the salary of the job being applied for, this may be considered a risk no matter how old the debt is. Although debts that are more than five years old, are a result of student loans or were for extensive medical care for an immediate family member are typically not considered to be a risk.

Employers should ensure that there is a good business reason to request a credit check on a potential employee and that the credit check is relevant to the offered position. They should also check state and local regulations to ensure that a credit check is an allowed part of the hiring process. Employers should also make sure they have a policy stating when credit checks will be used in the hiring process.

It is a good idea to question why a credit check is being used as part of the hiring process. A credit report contains a lot of private information, and some employers have been known to misuse this information. It is possible that the information in a credit report may be used to discriminate against an applicant. Also, remember that the Federal Bankruptcy Law generally does not allow a bankruptcy filing to be used in making a hiring decision. Additionally, it’s OK to ask an employer why they are obtaining a credit report, and they should be able to give you a clear reason.

Your personal background check is required for literally everything in your life these days, from employers to rentals. Take control of yours.


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