by Elizabeth Aldrich | Updated July 17, 2021 - First published on March 18, 2019
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Worried that your credit history is sending red flags to potential employers? Here's the truth about how your credit score impacts the job hunt.Image source: Getty Images.
Your job history is too patchy or not robust enough. You're either overqualified or underqualified. There are 20 other people waiting in line to be interviewed after you. On top of it all, you've had some missed payments and negative marks on your credit report as of late because finances have been tight while you search for a new job.
Job-hunting is stressful enough without having to worry that your less-than-perfect credit score will make you seem like a less competitive candidate. Luckily, depending on the field you're in, you might not have to worry about your credit history playing a part in whether or not you get the job.
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If you're wondering whether or not employers can check your credit score, then the answer is no. The idea that an employer can see your credit score is one of the most persistent myths in the world of credit advice. Experian, one of the major credit bureaus, has gone on record to confirm that employers will never receive your magic number.
However, prospective employers can check your credit report -- which is different from your credit score. Your credit score is a number that credit scoring agencies develop to essentially give a rating to your credit history. Your credit report is a statement that details your credit situation and past credit activity without disclosing your credit score.
What employers receive when they check your financial background isn't your score, or even a full credit report -- it's actually a modified credit report meant specifically for employers. According to TransUnion, the employment credit report shows a "comprehensive credit history" and public record information. So, they'll see things like your payment history and amounts owed. The report is designed to help employers see if you've been straining yourself financially and not fulfilling your obligations.
That being said, you must give the employer permission to do this, so you'll know if they're looking into your financials. On top of that, most employers don't even request this information.
The other persisting credit myth is that your credit report is a crucial part of the job screening process. In fact, according to a survey of human resources professionals done by the National Association of Professional Background Screeners, 62% of employers never look into financial or credit history for any of their applicants. A quarter of employers do some credit screening for particular positions for which it might be pertinent, and only 6% of employers run financial checks on all applicants.
If you're applying for a position that involves handling cash, accounting, government work, or dealing with sensitive financial information, there's a better chance that the employer will look at your credit report. However, if you aren't applying for a position that deals with finances or requires extensive security screening, prospective employers are unlikely to look into your credit history. Even if they do, a few bad marks aren't necessarily a deal-breaker. Some employers simply use credit reports as an additional tool for verifying applicant identity and preventing employment fraud.
Just because your credit score is unlikely to be used for employment purposes doesn't mean you should let it fall by the wayside. Good credit is still immensely useful in today's world for everything from qualifying for good deals on rewards credit cards to getting a personal loan for a car to securing a low rate on your mortgage. If you ever plan to purchase a car or house -- or even if you just want to score free flights with a travel credit card -- good credit will save you lots of money.
Luckily, there are always ways to redeem bad credit. One of the most effective methods for continually increasing your credit score is to use a credit card regularly and pay it off in full each month. If you don't qualify for a regular credit card, you can consider one of the best secured credit cards, which are specifically designed for rebuilding credit. Another sure way to improve your credit it by paying off debt. Look into the best balance transfer offers for a way to pay down your balance quickly and avoid interest fees.
Whatever your situation, remember that bad credit isn't the end of the world, and it's never too late to recover your credit score.
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