Can an Employer Check My Credit Score?

When we interview for a job, employers are usually evaluating us based off of our past experience, subject knowledge, personality, and skills. Every employer has their own checklist of things that they are looking for in a new hire. This process is stressful enough as it is. But can employers check our credit report too?

While potential employers only have access to a condensed version of your credit report, which means they do not have access to your comprehensive credit report. For many employers, a resume and an interview is enough to close the deal, but it’s still good to be fully aware of the information that they could have access to. 

How your credit report can affect your employment 

If you have good credit, this probably isn’t an issue for you. But if the thought of a potential employer pulling up your credit report makes you uneasy, here is the good news: They won’t be able to see your three-digit credit score. In fact, the information that is found on your credit report during a pre-employment credit check is much different from what that lenders see. 

When employers check your credit report, they will be able to see a version that excludes information such as your date of birth, account numbers, information about your spouse, and any other personal information that could violate the terms of equal opportunity employment laws. 

Your actual credit score, which is used to decide whether a person can and should be issued credit, doesn’t show up on the report because it’s not relevant for making hiring decisions.

 Here are some of the things that a potential employer will see during one of these modified credit checks:

  • Name.
  • Social Security number.
  • Information about debts including:
    • Mortgages.
    • Credit card debts.
    • Student loans.
    • Payment history. 

If credit checks make you nervous, it doesn’t hurt to check your credit from time to time so that you know what your potential employer might see. Request a free credit report from any of the three major credit bureaus so that you can stay ahead of the game and keep your job-search stress at a minimum. 

Why employers check your credit score

At this point, you might be wondering why a potential employer would want to take a peek at your credit report in the first place. A candidate’s credit history could raise some red flags indicating possible problems that an employer might want to steer clear from. Here are some examples:

  • A history of late payments could send the message that you are forgetful or unorganized, which could be important if you are expected to do detailed administrative work or meet strict deadlines. 
  • Excessive credit card usage or credit card debt could indicate that you aren’t financially responsible. This is especially important if you are applying for a job where you will be handling money or given a company credit card. 
  • Any information on your credit report indicating that you are financially irresponsible might cause an employer to consider their other options. 

A nationwide survey by the National Association of Professional Background Screeners and HR.com found that 25% of companies ran credit checks on potential employees for some positions, while only 6% ran pre-employment credit checks on candidates for all positions. 

Unless you are applying for a job that involves a security clearance, being responsible for company money, collecting sensitive information from customers, or having access to private company data, it’s highly likely that you are in the clear as far as employment credit checks go. 

How does an employment credit check affect my credit score?

Now that you know that potential employers are taking a glance at your credit history, here’s the silver lining: The credit checks that employers conduct are considered a “soft inquiry.” This means that it does not negatively impact your credit score or show up on your credit report the way it might if you were to apply for a credit card. 

Furthermore, your credit report won’t show any other soft inquiries, which means that employers won’t be able to see if a different employer has recently checked your credit report. 

What are your legal rights 

Fortunately, if you have to undergo an employment credit check, there are some legalities that work in your favor including:

  • You must be notified by the employer before it conducts a credit check: Different states have different restrictions surrounding pre-employment credit checks, and some have laws banning them altogether.
  • The employer must warn you if they are denying you employment based solely or partly on the information found on your credit report. 
  • The employer must give you a reasonable amount of time to respond before taking action so that you can properly explain your situation or in case the information on the report is inaccurate.
  • After the credit check is done, the employer has 60 days to follow up by providing you with the name of the credit report agency and information on how to access a free copy of the report they used.

How to prepare for employment credit checks

Even if you have a bad credit score, staying on top of your credit report by checking it regularly is one way that you can prepare yourself for future credit checks to come. 

You have access to one free credit report per year which you can get from any of the three major credit bureaus by using the annual credit report website. 

Checking your credit score keeps you on the offense, but here are some ways you can maintain or achieve good credit:

  • Stay up to date on your bills.
  • Don’t overuse your credit cards.
  • Check your credit report regularly.