What to Know About Employment and Your Credit

Can an Employer Access My Credit?

Your employer may be able to view a modified version of your credit report with your written permission. That said, employers do not have access to your credit scores.

Depending on laws in your state, an employer can access certain information contained in your credit report. In order to run a pre-employment credit check, employers must comply with laws outlined in the Fair Credit Reporting Act (FCRA). More on this below.

Why Do Employers Check Your Credit?

Some employers may check your credit to look for potential signs of risk when making a hiring decision. Particularly in the financial industry, an employer may look for patterns in a candidate’s money management skills.

Employers typically review applicant or employee credit reports to:

• Verify an applicant’s identity
• Look for signs that an applicant is financially responsible
• Look for a history of skillful financial management
• Look for any red flags, such as missed payments or high balances

Learn more >> Why Employers Check Your Credit Report and What They See

What Do Employers See When They Check Your Credit?

First, note that employers who run credit checks cannot see your credit scores. They also can’t view your date of birth or other information protected by equal opportunity laws.

Information in the credit report employers receive includes:

• Payment history
• Available credit
• Account balances
• Any late payments, bankruptcies or foreclosures

Can My Credit Prevent Me From Getting a Job?

It’s possible that bad credit history could hurt your chances of getting a job, especially if you’re applying for a role in finance or management, or a job with the government that includes security clearances.

That said, not all employers run credit checks on employees. Also, many states (and some cities) have laws against employers using an applicant’s credit history to make decisions about employment.

If you’re thinking of applying for a job, talk with the hiring manager to find out what’s involved with the background check process. That way, you’ll know what to expect.

Learn more >> How to “Fix” a Bad Credit Score

What Legal Rights Do You Have as a Job Applicant?

Job applicants have several legal rights. First, you have the right to be free from discrimination on the basis of federally protected characteristics, including race, color, religion, sex, national origin, disability and age.

The U.S. Equal Employment Opportunity Commission (EEOC) enforces federal laws prohibiting discrimination in employment. If you believe an employer discriminated against you during the pre-employment credit check process, you can report it to the EEOC on its website or by phone at 800-669-4000.

Beyond complying with anti-discrimination laws, employers must adhere to FCRA guidelines in the following circumstances:

Before Pulling Your Credit

Because information found in your credit report is sensitive, federal law prohibits employers (and most others) from accessing it without your written authorization.

Employers must inform applicants and employees that their credit information may be used to make an employment decision. They must present this notice in a stand-alone, clearly visible written format. It can’t be included within the job application, for instance. The employer also needs to obtain an applicant or employee’s written consent before pulling their credit.

Learn more >> Can Someone Run a Credit Check Without My Permission?

If They Decide to Take Adverse Action

“Adverse actions” could include rejecting an applicant, denying a promotion or terminating an employee.

If an employer decides to take adverse action based on the information inside your report, they’re required to provide you with the credit report they used to make their determination, along with a summary of your FCRA rights.

This gives you a chance to review the credit report. You’ll then have the opportunity to review the report and explain any negative information before the employer finalizes its employment decision. You have the right to dispute information on your credit report that you believe is incorrect.

How to Prepare for a Credit Check by an Employer

While not all employers look at credit as a factor in hiring, promoting or evaluating employees, some may. Here are steps to take before an employer credit check.

1. Check Your Credit Report

Review your credit report, which you can do for free with Experian anytime, to see what appears there. Look for any negative information, such as a high credit utilization rate, and aim to address them before your employer pulls your credit.

Be sure to also scan your report for any information you believe is inaccurate. If you notice an error, you have the right to dispute it.

2. Pay Your Bills on Time

Your payment history is the single most influential factor in determining your creditworthiness, and it may also be a key element employers weigh if they check your report. Be sure to make on-time debt payments every month. Creating a budget that plans ahead for your monthly due dates and setting up autopay are two strategies for ensuring you never miss a payment.

3. Handle Past-Due Accounts

If you have past-due accounts on your credit report, prioritize addressing those debts. Contact your lender to discuss possible relief options if you can’t make payments right away. If you’ve experienced financial hardship, come prepared to the conversation with documentation of your financial circumstances. You may be able to work out a payment plan that can help you get your account back in good standing.

If you’re struggling to manage your debt, consider working with a nonprofit credit counselor. They can help you review your finances and may recommend a debt management plan for repayment.

Learn more >> How to Improve Your Credit Score

Does Employment Affect My Credit Score?

Your employment status isn’t a factor in your credit score and won’t impact your credit in any way. That means getting a new job or increasing your salary won’t improve your score. It also means that you can rest assured that entering a period of unemployment or having your wages reduced won’t hurt your credit score either, all other things being equal.

Inquiries for employment purposes don’t affect your credit. When an employer obtains a copy of your credit report for employment purposes, that soft inquiry will appear on your credit reports but won’t affect your credit scores. Those inquiries won’t, however, show up on the version employers see. This policy protects your privacy because other employers or creditors won’t be informed about job-related activities.

Frequently Asked Questions

• How Does an Employer Get Added to My Credit Report?

  When you apply for credit, such as a new credit card or loan, creditors commonly ask for employment information, including your current employer name and sometimes your income or salary. You’ll also likely need to provide other personal details like your name (and any past aliases), date of birth, Social Security number and address.

  This personal information is generally used by lenders to help confirm your identity when you’re applying for credit. Asking for many different types of personal information, including your employment history, can help employers prevent fraud by verifying that the person applying for a loan or credit is who they really say they are.

  Other types of employment information, such as your title, your salary or the dates you worked for an employer, won’t show up on your credit report—even if you had to provide this information on your credit application.

• Will Past Employers Appear on My Credit Report?

  It’s possible for past employers to show up on your credit report. Creditors commonly ask for employment information, which then may get passed along to the national credit reporting agencies and added to your credit file.

  That doesn’t mean all your past employers will be listed, though. Lenders aren’t required to send employment information to the credit bureaus, and some choose not to. As a result, a credit report won’t necessarily provide a complete history of your past jobs.

  It’s also important to note that your past and current employment doesn’t impact your credit score in any way—the same goes for your income.

• How Do I Update Employers on My Credit Report?

  You cannot remove an accurate employer from your credit report—past or present. On the other hand, if an employer shows up on your credit report that you don’t recognize, or if there’s other incorrect information, you have the right to dispute it with the credit reporting agency.

  Every time you apply for credit, you may be asked to provide information about your employment history to help confirm your identity. This information can then show up on your report, though not always: Since lenders aren’t obligated to share this information with the credit bureaus, your credit report may not show all of your current or past employers.

Build Good Credit to Expand Your Opportunities

Depending on the industry you’re in, you may never have to deal with a credit check by an employer. However, if you’re hoping to obtain a role in management, financial services or for a government agency with security clearance, it’s best to work on improving and maintaining a good credit history.

To start, check your credit score and credit report to see where you stand and look for areas that may need some improvement. Also focus on making on-time payments, keeping your credit card balances relatively low and being strategic about when you apply for new credit.