Could an Employee Credit Check Cost You a Job?

Banks and lenders use credit reports and credit scores to determine if you’re trustworthy and likely to pay back a loan. But financial institutions aren’t the only ones interested in your credit report. Potential employers sometimes perform an employee credit check on applicants, too, and a bad report could cost you a job.

Your Credit Report vs. Your Credit Score

A lot of importance is placed on credit scores, but it’s really your credit report that matters most.

Your credit report contains all relevant information about your behavior with credit. It shows how often you request credit with financial products such as loans and credit cards, and it reveals how many lines of credit you have open. The report also details if you’ve ever missed a payment, gone delinquent on a line of credit, or declared bankruptcy.

Your credit score is merely reflection of all the information in the report. FICO credit scores range from 300 to 850; scores above 720 indicate a dependable borrower.

What a Credit Check May Uncover

Why would a potential employer want to pull a copy of your credit report if he or she isn’t going to be loaning you money? There are several reasons for this:

• To ensure you can be trusted with a company credit card
• To determine if you’re responsible
• To verify that you are who you claim to be — especially if you’re applying for a job in the financial, pharmaceutical, chemical, or defense industries
• To see if you’re financially stable; while employers can’t view your bank account information on the credit report, they can check to see if you have lots of loans or tend to max out credit card

Understanding a Soft Pull

When potential employers request an applicant’s credit history, they’ll receive a modified version of the report known as a “soft pull.” This report gives employers access to:

• Your Social Security Number and driver’s license number
• Information on public record including bankruptcy
• A credit history overview of how you’ve handled credit
• Up to two places of previous employment
• Your home address
• A profile summary including payment patterns to your lenders

Unlike a full credit report, a soft pull will withhold some of the following information from your potential employer, including:

• Your credit score
• Your birth year
• Any details about a spouse
• Your bank account information

If your potential employer decides to pull this report, it won’t have a negative impact on your credit score.

Keeping Your Credit Report Healthy

A credit report riddled with negative information could easily keep you from being hired. The most important way to keep your credit healthy is to always pay your lenders on time — never miss a credit card or loan payment. Other factors to keep in mind include credit history length, amounts owed, new credit, and types of credit.

Once a year, you can check your credit report from each of the three credit bureaus (Experian, Equifax, TransUnion) for free. The reports are available at AnnualCreditReport.com, a site endorsed by the federal government. You can pull all three at once or space them out throughout the year. Your credit score won’t come free with these reports, but you can use Credit Karma, Quizzle, and Credit Sesame to view approximations of your credit score.

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