How Does a Credit Report Affect the Prospect of a Job?

When an employer is examining a job applicant, in addition to verifying previous employment history and military service and running a criminal background check, some employers run credit report background checks for certain sensitive positions. In most cases, employers don't request credit reports for applicants for minor entry-level positions.

Function

The reason that an employer might run a credit report on a job applicant is to determine how well that applicant can handle his finances. Since credit reports also present the amount of debt that an applicant might have, it allows potential employers to determine if the salary level is too low for the level of debt the applicant is in.

Benefits

The benefits of checking a job applicant's credit report include being able to screen out applicants who might have bad credit and are applying for positions where they might be in a position to handle cash or sensitive material. On the other hand, there might not be any benefit to running a credit check on a potential applicant who is applying for a basic entry-level job and isn't going to be put in a position where he might have access to any cash.

Significance

A credit report history is significant in that it shows the employer how the applicant handles his finances. When an applicant has a credit history that is positive, this reveals a certain level of responsibility that the applicant has shown. Conversely, when an applicant has a credit history that is bad, this might show a certain lack of responsibility where finances are concerned.

Considerations

Before a credit check can be performed on an applicant, that applicant must first give permission for the company to run a credit check. In addition to giving permission, job applicants must receive a copy of the form giving consent, which will also spell out their rights under the Fair Credit Reporting Act. If an applicant does not give permission, the company may choose to come away with a negative impression.

Prevention/Solution

Maintaining good credit is the safest way to ensure a favorable viewing by potential employers. For this reason, it is important to check credit history at least once a year. If a credit report contains incorrect information, the individual can file a dispute with the credit bureau, asking the bureau to correct the information. If the information is removed, the credit bureau must then notify any individuals or organizations that have requested that credit report in the past two years of the change in status. In addition, the credit bureau must furnish a free updated copy of the report to the individual.