At a Glance
Going through the job application process only to be told that there will be a credit check for employment can be confusing, especially if you aren’t applying for a role in the financial world. This matter of a pre-employment credit check can only be made worse if you know you don’t have the best credit. Learn everything there is to know about employment credit checks including why they occur, what can be seen, and your legal rights during these checks.
In this article, you’ll learn:
Why do employers look at your credit?
There are a slew of reasons an employer may choose to conduct a credit background check for employment, but some of the most common reasons include:
- Looking at your history of payments to see if you are a responsible or organized person.
- Seeing how much credit you currently have on-hand to see if you are in financial distress.
- Examining your current relationship with personal debt to see if you can manage funds, especially if you are applying for a financial role.
- Verification of identity, background, or educational information provided during the job application process.
What do employers see when they check your credit?
Regarding an employment credit check, there are several items that can be seen when an employer conducts one. The most prominent items include:
- Identifying information about yourself such as your name and address.
- Any credit accounts you have and your available credit.
- The payment history of your accounts.
- Any bankruptcies or liens that you have.
- Any applicable employment information or work history you have included on credit applications.
What employers don’t see?
An employer credit check does provide employers with a large amount of information, but there are many items that an employer will not see. These include your credit scores, your current level of income, any medical bills you have, the account numbers on your accounts, and information that could be used to discriminate.
Does a credit check for employment hurt your credit score?
Credit checks for employment result in a soft pull on your credit score which will have no impact on your credit. It’s worth noting that soft pulls on your credit will not show on your credit report, so an employer will not be able to tell if other employers have been looking at your report as well.
What are your legal rights during an employment credit check?
With the reasons for why employers do credit checks outlined, it’s important to outline what rights you have during the process as this may be concerning. An employer must notify you and get your permission if they want to check your credit, and this notice must be explicit. Additionally, an employer needs to inform a potential employee if the credit check is the majority reason they are not being hired.
Employers also need to wait at least three to five days, on average, before running the check to give you a chance to notify them of anything they may see that is unusual. Finally, the employer must follow up with a post-adverse action notice.
How can you be prepared for an employer credit check?
When looking at whether employers check credit score and finding out the answer is yes, it’s natural to be a little apprehensive about this potential employer seeing so much about you. Rest assured knowing this process is completely normal and, if your credit is fine, then there is nothing you need to do to prepare. However, if you have had a checkered past with credit, take the time to let your potential employer know about any issues.
Technically, an employer may make a final decision on employment based on something they saw in your financial background check. However, under employer credit check law, some states have made it illegal for employers to do this.
No, an employment credit check will be a soft inquiry into a person’s credit, meaning it will not affect a person’s credit score.
Yes, a potential employer is legally obligated to inform you that they wish to perform the check and they need your explicit permission to do so.
Over half of all employers indicated that they perform financial background checks on potential employees as a part of their employment screening process.
On average, it will take around two to four days for the results of an employer background check to be returned, but it may take longer for them to review and get back to you.