WHY DO EMPLOYERS CARE ABOUT YOUR CREDIT? I posted a photo yesterday because I thought it was funny but I have come to realize that it struck a different chord with many of you - particularly regarding credit checks when applying for a job. Please let me try offer an explanation: Sometimes it may be because of the nature of the position to which youre applying.: Credit report errors, college savings Certain categories of employers regularly review credit histories such as banks, brokerage houses, government and other financial institutions. Evaluation of credit history is also frequently applied to accounting and money management positions where there is potential for fraud and embezzlement. Employers have a responsibility to assure that the proper due diligence is applied. Other employers look at credit histories in order to separate one candidate from another. Credit report information is an excellent data point when comparing and contrasting two or more candidates for the same position. If, for example, an applicant reports a significant level of personal debt obligations or credit delinquencies that might distract that person from his or her job responsibilities, then a hiring entity may take that information into consideration when comparing such an applicant to another comparative candidate without such distractions. Or maybe a company just wants to get a better idea of the person its considering hiring. Financial information may not be the employers priority. Ensuring that your employees are responsible and ethical is a must. Relying on character references is becoming less reliable than verifying records and professionally screening workers beforehand. Its true that credit checks can verify demographic and location information. They will include identifiers such as name, spouse, Social Security number, alias, address, phone and previous employment. A credit report can provide a snapshot of a persons economic life that may confirm or contradict the resume. Perhaps someone claims they made a good six-figure income for the last 10 years, yet they show repeated credit problems during that period. Are they lying about their income? Are they poor money managers? Do they have a major financial issue thats draining their resources? Any of these might (or might not) have a negative effect on their job. The Fair Credit Reporting Act governs almost all issues related to the use of credit reports. Job applicants have the right to a copy of their credit report, and the law requires the hiring entity to provide a copy to the job applicant. In addition, if an employer decides not to hire a candidate based on the results of a credit report, the candidate must be told the reason why and be provided with the credit report information. Job seekers must be prepared to deal with a potential employer looking at their credit report. If you have a less than stellar credit score, here are three things you can do: 1. Be prepared for the scrutiny Just as you would if showing your home to a prospective buyer, tidy up your credit record before you put your career on the market. Know your credit score, and examine your credit record. If theres an error, U.S. residents can visit the Federal Trade Commissions website to learn step-by-step how to dispute and correct the error. But keep in mind, there is no quick fix that instantly raises a credit score, so have some patience. 2. Bring up issues on your own As an applicant, if youve got credit problems and the company asks permission to run a credit report, youre far better off if you bring up any issues theyre likely to uncover proactively, getting out your side of the story before the company even realizes there is a story. A lot of people have problems with their credit, particularly nowadays. But you need to control the story, not let the credit reporting company control it. Hiring companies understand no applicant is perfect, but they want to understand that imperfection, whatever it may be. 3. Realize youre not alone In most cases, a degradation of credit history is a slow process and would most likely affect those candidates that have been out of work the longest the most. Remember, if your credit history has been damaged, youre in the same boat as countless job candidates. And dont forget, its a huge boat. Employers have a responsibility to hire the most competent and qualified candidate. Be prepared and have a plan. I hope this answers at least some of the questions surrounding this issue.
Posted on: Thu, 31 Jul 2014 13:45:17 +0000