Job Seekers and Credit: Why Prospective Employers Care About Your Credit History

A poor credit history doesn’t mean you won’t get that dream job, but your credit history can play a role in an organization’s decision to hire you. So, if you’re looking for a new job, you need to know why prospective employers care about your credit history.

Many companies that conduct credit background checks do so to reduce liability for negligent hiring and to decrease the chances of theft and embezzlement. Generally, prospective employers view your credit history as a reflection of your overall level of responsibility and trustworthiness.

Additionally, your credit background check is most likely part of a comprehensive background report that includes information like your credit history, past employment and any legal activity. It’s also important to know that prospective employers are not reviewing your credit score, but rather, they are looking at your credit reports, which provide information about past and current accounts.

Understand your credit report

To start, you need to know what a credit report is. You have three credit reports – one from each of the major credit bureaus. Each bureau’s report is based on account information they receive from your lenders. Your credit reports provide information about past and current accounts and are used to calculate your credit score.

All credit reports provide the same categories of information, which include:

  • Personal identifying information such as your name, address and social security number
  • Tradelines, which are your credit accounts like a mortgage and car loan
  • Credit inquiries that provide a 2-year history of everyone who has accessed your credit report
  • Public records and collection, which can include bankruptcies, foreclosures, liens and judgments

Before you start your job search, make sure you take the time to review your credit reports and make sure that all information is accurate. If you find any errors, contact the credit bureaus and have them corrected.

3 Common Myths About Credit Report Checks by Prospective Employers

You may already know that some prospective employers might run a credit check, but do you know why and what they’re looking for?

Myth 1: Employers are looking at your credit score. 

Truth: They are actually looking at your credit history.

Myth 2: Employers and lenders review the same credit information

Truth: While lenders focus primarily on your credit score and history, employers are looking at a comprehensive background report that can include your credit history, past employment and legal activity.

Myth 3: Employers don’t care about bad credit

Truth: While one late payment won’t disqualify you from getting a job offer, employers do care about your credit history. They view your credit history as a reflection of your overall level of responsibility and trustworthiness.

3 Tips to Keep Your Credit Reports in Good Shape

  1. Pay all your bills on time, every month
  2. Do not use more than 30% of your available credit on any card
  3. Monitor your credit reports and contact the credit bureaus if you find any errors

If you’re looking for a new job, review your credit reports and maintain healthy credit habits.

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