Credit card companies, mortgage lenders and banks all use credit scores to determine borrowers' likelihood to repay their debts. However, a bad credit score can also hurt a person's chances of finding a job, states MSN Money, a consumer finance website. Many companies run credit checks on applicants. Businesses use these credit data in many ways.
Identity Verification
Some companies that run credit checks on applicants do not place much, if any, weight on an applicant's credit score or past financial history. Instead, these corporations run the checks simply as another way to verify an applicant's legal name, Social Security number, employment record and address history, all of which appear on a person's credit report.
Money Handling and Security-Sensitive Jobs
Banks, financial institutions and governments often run credit checks on applicants for jobs that involve handling or managing large amounts of money, such as financial executives, or obtaining high-level government security clearances, such as intelligence analysts. An applicant's credit score and financial history is an important factor in obtaining a job in one of these fields. These employers prefer to hire those with low outstanding debts and good credit scores, because they believe those with bad credit or large amounts of debt will be more likely to take bribes or steal money.
Determine Job or Life Responsibility
Some companies believe individuals' credit scores relate to their overall level of responsibility in their professional and personal lives. Therefore, they run credit checks on all job applicants, even those applying for entry-level, low-paying positions. These businesses shy away from hiring those with substandard FICO scores, preferring those with sterling credit histories.
Firings and Promotions
Credit scores do not just impact hiring decisions. In some cases, employers may use poor or substandard credit scores to fire existing employees, especially those who work in financially oriented or security-sensitive positions. Additionally, some employers check the credit of employees whom they plan to promote to higher positions. These companies may decline to promote those with substandard FICO scores.
Exceptions
As of March 2010, the states of Washington and Hawaii made it illegal for private (nongovernment) employers to run credit checks on employees, says Find Law, a legal information Web page. As of January 2011, other states and regions were considering bills to make employer credit checks illegal.
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