Looking for a job today can be stressful with all of the competition for employment… The thought of a potential employer reviewing your credit report can add to your stress level. Under the Fair Credit Reporting Act (“FCRA”), the federal statute enacted to protect consumers from unfair credit reporting, employers are permitted to review an employee’s or job applicant’s credit report with specific limitations set forth under the law. While an employer is allowed to take a look into your financial history, it is not allowed to violate the law. Over the years several myths have been created about what an employer can and cannot do.
The first myth related to employee background checks is that lenders and employers are looking for the same information about you. This bit of information is not true. Lenders place all of their emphasis on your credit history and employers are most often looking to see if you have a criminal history, pay your bills or have any judgments against you. Lenders are looking to see how much debt you have, how you pay your bills, and what your credit score is. An employer is not allowed to view your credit score under the FCRA and is really just looking for an overview of your credit history overall.
A second myth is that all employers pull job applicant’s credit reports. Financial experts say that while most employers do pull applicant’s reports, less than half review them and use them in making a decision to hire. Credit checks are usually conducted in financial related jobs or higher level positions. For example if you are applying for a banking position or a job where you handle money it is expected that an employer will pull your report. Further research shows that credit checks are also usually conducted only after a decision to hire the applicant is made.
The third myth is that a poor credit history means you won’t find employment. Bad credit in your past does not automatically mean you won’t be hired. If your credit history is not great but in the recent past you are on the road to improvement, employers are often understanding. Not everyone has pristine credit all of the time and a few negative accounts won’t count you out of the running for a job position.
The fourth employment background myth is that employers use your report to discriminate against applicants with poor credit history. This myth could not be further from the truth. The real reason employers conduct background checks is to protect themselves. It is an employers responsibility to do due diligence prior to hiring an employee and checking your credit report is a simple way of looking into your past.
The last background check myth is that employers don’t want to hear about your reasons for having bad credit. If you are looking for employment and are asked by an employer to review your report, come clean. If you know you have poor credit and have a legitimate reason, provide the employer with the information up front. Nothing is appreciated or respected more than honesty. One is more likely to lose the job for trying to hide something rather than for the thing that is being hidden. If you can explain away your poor credit, don’t let your employer be surprised. Let your employer know why your credit looks the way it does and what you plan to do or are already doing to make it better.
The FCRA provides consumers with a lot of protection under the statute. If you feel your rights have been violated, contact SmithMarco P.C. for a completely free case review.