Do Employment Credit Checks Lower Your Score?

A consumer's credit score is made from computations relating to payment history, comparative credit and debt ratios, the timeline of credit maintenance and credit account types. Certain credit checks lower your credit score, but employment credit checks have no impact on the overall credit rating. Employment listings within your credit report provide information that potential creditors and employers may find interesting; inaccuracies in this area may affect employment or loan qualification.

Hard Inquiries

Experian, TransUnion and Equifax---the three primary credit reporting agencies---separate credit checks into two categories, hard and soft. Hard checks, also called pulls or inquiries, can lower your credit score by an average of five points for a six month time period. Consumers authorize hard inquiries during the qualification process for a new loan or to open a bank account. Hard checks are the only type of credit check that lowers a credit score, according to Experian.com

Employment Inquiries

Employment credit checks are considered soft inquiries and do not lower your credit score. Employers must have your written permission prior to performing a credit check. It is a violation of the Fair Credit Reporting Act, or FCRA, for credit reporting agencies to provide consumer credit reports to employers without express permission from the consumer. Other soft inquiries that do not impact your credit score are those from potential insurers and credit card lenders who are fishing for clients.

Employment Records

A consumer credit report contains employment listings from past and present employers. The credit reporting agencies compile this information from past credit applications that consumers have submitted to potential lenders. The employment listings on your credit report can support the information on an employment application or it can highlight discrepancies. Existing and potential employers make use of the employment listings on your credit report to determine eligibility for employment or promotions.

Accuracy

If a potential employer checks your credit and denies you employment based on the information in the report, you have the right to receive a free copy of your credit file. Contact each of the three credit reporting agencies to request your free copy. By checking the report for accuracy, you can determine if the employment information is listed incorrectly or credit accounts listed contain inaccurate, negative information. Dispute inaccurate information with the agencies; they must validate the account and remove inaccuracies within 30 days. In addition, the FCRA requires credit reporting agencies to provide consumers with a two-year history of each employer credit check.