Did you know that more and more companies are turning to credit checks as another way to gauge your new-hire appeal or promotability?
And, if your credit history is spotty or even worse, you may find yourself out in the cold as far as that dream job is concerned.
There are many rules and regulations under the Fair Credit Reporting Act (FCRA) that govern how and when companies can pull your credit history when assessing you for a position. First and foremost, however, they are required by law to let you know they intend to perform a credit check and they must obtain your permission in writing. Additionally, if the employer refuses to hire you based on the results of that credit check, they must provide you with a copy of the credit report they used to make their decision, as well as a summary of your rights under FCRA. They are also required to give you the name of the credit reporting agency (CRA) which issued the report so that you can dispute any errors.
Given the potential effect of your credit history on future employment, it makes more sense to pull your credit report before you begin your job hunt (or apply for a promotion). Each year, you are entitled to obtain a free report from the three leading CRAs: Experian, Equifax and Transunion. Our recommendation is to review one of them every four months. Because each CRA uses its own methodology to collect your credit history, the information on each can be different. That’s why it’s important to review all three every year.
Check first, apply second
The generally accepted rule of thumb for most employers is to not pull a credit report until they’re ready to offer you that job or promotion. If you do have some serious credit issues, such as a bankruptcy, foreclosure, high credit card balances or liens, you might want to take the opportunity to explain their presence in your own words. Many people took credit hits during the Great Recession, so most likely the hiring manager will have seen these situations before. In fact, if you do you have problems, the time to broach the subject might be when they ask you to sign the form giving them permission to check. Keep in mind, too, employers are prohibited by law to refuse to hire someone based solely on a bankruptcy.
You are also free to refuse a credit check, but that would naturally raise red flags for any hiring professional. Again, you might be better off explaining any bad information before they find it on your report. Acknowledge the error of your past ways and, if you can, point to the better credit record you’ve established since then. Unless you’re applying for a position with substantial financial responsibilities, or a senior executive level job, chances are if the hiring manager wants you bad enough, they may overlook non-serious credit problems.
But why take chances? The time to ensure your credit history is error free is not when you’re in the interview, but before you even apply. If you do find errors, be sure to dispute them immediately. If you don’t have the time or the inclination to do it yourself, always be sure to work with a trusted partner who diligently removes real errors. Not drag the process out – costing you more money and wasting valuable time in your job search.