Your Credit Report Might Interfere With Your Job Search. Here's What You Need to Know
by Brittney Myers | Published on Aug. 14, 2021
Your credit history isn't just for loan applications anymore.
These days, your credit history is almost as important for your personal finances as your bank accounts. That's because it can impact everything from your ability to get a loan to your ability to get a job. Yes, that's right: Your credit can impact your job search.
One of the more pervasive myths when it comes to job hunting is that your potential employer can see your credit score. If you have a low score, this can certainly cause some anxiety.
The good news is that employers can't see your credit scores. However, there's also some bad news: Employers can check your credit reports, or at least a limited version of them. And, depending on the employer -- and what they find -- your credit history could lead to a rejection letter.
What your potential employer can actually see
Employers can't see your credit scores, nor do they get the same version of your credit reports that lenders receive. But they do still receive quite a bit of information about your financial background.
An employer version of a credit check can include your:
- Social Security number
- Current debts
- Payment history
In most cases, your potential employer probably already has your personal details like your name and Social Security number (SSN), which is often required to run the background check in the first place. Other than your SSN, the personal information on your credit reports is available through a basic background check that includes a public records search.
So, really, it's your current debts and payment history that are the meat of the report. This can include mortgages, auto loans, personal loans, or credit card accounts. Your credit reports will show last reported balances, as well as whether you're current on your payments.
One thing to note is that employers -- and potential employers -- require your consent to check your credit. A lot of companies will include this as a part of the initial employment application.
Some industries may care more than others
How much weight an employer gives your credit history -- or whether they even check it at all -- can vary a lot by industry and company. For example, if you're looking to work at a local drive-thru, your credit card debt probably isn't an issue.
However, if you're applying for a position in a bank or lending office, then your credit history could have a lot of influence on the hiring decision. After all, if you're not managing your own finances consistently, a company may not want to hire you to manage theirs. Too much debt could also be a red flag in certain security-sensitive jobs, as some employers may feel those with excessive debt are more susceptible to outside manipulation (like bribery).
If a company does plan to reject your application based on your credit check, it is required by law to notify you -- in writing -- that it's taking "adverse action" due to your credit. The company is also required to send you a copy of your report so you have an opportunity to dispute any incorrect information.
The best ways to clean up your credit reports
You have three main credit reports, one from each of the three major credit bureaus: Experian, Equifax, and TransUnion. You're normally entitled to one free credit report from each bureau every year, though you can get weekly reports through April 2022 due to the pandemic. You can access your free reports at AnnualCreditReport.com. (The site is safe and run by the credit bureaus.)
So long as your credit history is in good shape -- that is, you have no late payments, maxed-out cards, or defaulted accounts -- you probably have little to worry about if an employer checks it. However, if your credit history isn't looking its best, you may be able to clean it up.
The first thing to do when you check your reports is to ensure that everything on them should be on them. If you don't recognize any accounts, or there are other errors on your reports, you can file a dispute with the credit bureau to have the information corrected. You'll need to file a separate dispute for each incorrect item with each bureau.
If the problem items on your credit reports are legitimate (in other words, if you really did miss that payment or default on that account), then you won't be able to have them removed through a dispute. Instead, you may have to simply wait for them to age off your reports. Most negative items will automatically come off your credit reports after seven years.
While it's not highly likely that you'll lose out on most jobs due to your credit history, it's good to know where you stand and any potential red flags you may face. And, given the importance of your credit to your finances overall, it's information you should have even when not actively on a job hunt.
Alert: highest cash back card we've seen now has 0% intro APR until 2024
If you're using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.
About the Author
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.