Can Employment Background Checks Hurt Your Credit Score?

Information in your credit file at credit bureaus affects the calculation of your credit score. Employers who do background checks generally need information that goes beyond what they would be able to determine from your credit score. Nonetheless, some employers perform credit checks on employees and job applicants to gauge financial responsibility.

Credit and Background Checks

Credit checks and employee background checks involve different processes. Employment credit checks usually go through credit bureaus, which maintain consumer files that show whether a consumer pays bills on time, where the consumer has worked, and other information related to a person's finances. Employers use background checks to determine if someone has a criminal history or is currently facing charges in a court case. Employers use employment-screening services to do background checks, rather than credit bureaus. Therefore, a background check by itself generally has no impact on your credit score.

Inquiries

The credit industry refers to a credit check by an employer, creditor or lender as an inquiry because others ask, or inquire, to receive a copy of your credit report. The Fair Isaac Corporation created the FICO credit score. The company notes that inquiries do appear on consumer credit reports. However, the only inquiries that affect a FICO score are the ones that result from applications that consumer submit to open new credit or loan accounts. Therefore, a credit check done by an employer wouldn't affect your FICO score.

Credit Check Rules

The U.S. Fair Credit Reporting Act requires employers to get written consent from a job applicant or employee before performing a credit check, according to the Small Business Administration. An employer may decide not to hire or promote someone based on information in a credit report, even though the credit check won't affect a person's credit score. In such cases, employers are required to provide an applicant or employee with a copy of the credit report. The applicant or employee can contact the bureau that issued the report and dispute any incorrect information.

Considerations

People who don't work with cash, valuables or finances at their jobs may not need to be overly concerned about employment credit checks, according to an "MSN Money" article by Liz Pulliam Weston. That's because some companies are more concerned with verifying a job applicant's identity or checking into criminal histories than in checking credit ratings. Therefore, a recent criminal history may be more likely to prevent someone from getting or keeping a job than a low credit rating.