The economy will always have an impact on the personal finances of many individuals in terms of mortgage payments, car payments, credit card balances, childcare and medical costs. When these pressures are combined with the struggles of an unexpected termination, a job layoff or a pay cut, it can be difficut for any individual to keep his or her head above water. You look for new employment to remedy your situation and suddenly you hit a wall. Here you are conducting a job search so that you can improve your financial situation and you learn that your personal finances or a bad credit score may prevent you from getting the job offer! It’s a vicious cycle that job hunters nationwide have had to learn to deal with and it can move a top candidate to the bottom of the pile.
Today, more and more employers are running credit checks on candidates and it’s no longer just for positions with access to money such as cashiers, tellers and financial professionals. Industry reports indicate that more than 40% of employers are running pre-hire credit reports as part of their due diligence process. Some companies believe they can deduce how a person will handle their job responsibilities based on how they handle their personal finances. Others use the information to gauge how long a person might stay in a position if their debt load is higher than a position pays. It is also used to verify employment history and social security number.
There is no clear connection between a credit history and job performance and many job seekers consider it to be an unfair way of screening candidates; however, no Federal discrimination law specifically prohibits employment discrimination on the basis of a bad credit report. The Fair Credit Reporting Act (FCRA) and state credit laws help to regulate how an employer can obtain and use their findings. An employer must gain your consent in writing to do a credit check and the report they receive is different than one viewed by a credit or an individual. Full account numbers are not revealed and they won’t see a credit score, but they will be able to see late payments, collections and bankruptcies. If you are actually denied employment because of your credit report, the company must notify you so that you may view the report on which the decision was based.
The bottom line is that if you are currently interviewing or are about to do so, view your own credit report so that you know what it says so that you can run interference on something that may appear damaging. You are entitled to one free report by accessing one or more of the three major consumer reporting agencies:
- Equifax: 800.685.1111
- Experian: 888.397.3742
- Trans Union: 800.916.8800
According to consumerreports.org, consumers find 13 million inaccuracies on their credit reports each year, so it is worth your time to investigate, review and dispute if necessary. Since an employer must alert you if they plan to run a credit check, you can certainly ask how the information will be used to judge your suitability for employment. If you suspect that something on your record could hurt your chance of an offer you might want to deflect this in advance by letting the interviewer know that there may be some late payments, etc., but that in no way impacts your abilities. You might state that your unemployment has presented current economic challenges that have made it necessary for you to stretch your dollars and prioritize needs.
In the meantime, a House Bill was assigned to a congressional committee last year that would prohibit employers from using credit report details for their hiring decisions. The Equal Employment for All Act of 2015 if passed, will keep credit worthiness (with some exceptions for financial firms and government agencies) out of the employment process so that getting credit at work, will make it more about performance than payments.