Credit Scores and
Employee Background Check

An employee background check is a common practice these days. So it is not surprising that your credit can affect your ability to get a job or a promotion.

More and more employers are using your credit information as part of their employment screening process for hiring or promotions.

Your credit scores may have suffered as a result of unemployment, divorce, or bankruptcy. If so, when applying for your next job, just be aware of why many employers feel the need to see your credit reports.

Some employers will do a comprehensive employee background check, including a credit report, to be protected from liability related to an employee's misconduct. They want to avoid being accused of failing to thoroughly check an employee's background. Especially with employees hired in a position with access to cash, customer information or other valuables. The thought is, if an employee is having financial difficulty, they may be tempted to abuse their position.

Other employers will do an employee background check and use your credit reports to see how often you move or change jobs. They may consider you unstable if you've moved too frequently. You may consider notifying the credit bureaus to remove any outdated or inaccurate addresses and employment history from your credit reports.

If you have a lot of debt, many employers may be concerned that your new salary may be insufficient for your financial needs and you may soon seek other employment. So you may consider a consumer credit counseling service or negotiate debt settlement with your creditors.

Your credit may be the determining factor when an employer is deciding between two equally qualified candidates.

To do an employee background check for a legitimate reason is one thing, but some feel it's an invasion of privacy to require a credit check as a routine part of the employment screening process. The issue is debatable. But you should know that you do have some rights regarding your credit reports.

Anytime a potential employer pulls your credit report, they are required to comply with the Fair Credit Reporting Act. The Act requires an employer to give you advance notice that they intend to pull your credit report. They have to let you know "conspicuously". They can't just slip it in an employment application.

Also it's important to know that employers see a different credit report than the one a creditor would normally see. For example, your credit scores are not provided and your account numbers are only partially revealed. But they will see any liens, delinquent accounts, charge offs, judgments, or bankruptcy filings. So you may want to know all you can about legal credit repair.

Steps you can take

  1. Review a copy of your credit report before applying for employment. You're entitled to get a free copy from each of the Big 3 credit bureaus every 12 months at www.annualcreditreport.com.

  2. If you have negative credit items on your credit report, learn how to legally fix your own credit or hire a reputable credit repair organization to help legally improve your credit.

  3. If an employer asks you to sign a consent form to pull your credit report, you can request to know why it's needed and how your credit information will be used.

  4. If you have bad credit and you know the employer will review your credit report, you may want to be up front and explain your situation. This may help to defuse the problem in advance. Some employers are sympathetic to the credit problems candidates face as a result of the economy. They may also appreciate your candor and honesty.

If you're denied employment or a promotion because of your credit, the employer has to notify you of this fact within 5 days. You then have the right to a free copy of the credit report used to deny you employment. You can obtain a free copy at www.annualcreditreport.com.



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Credit Improvement Tip#2

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