Why do some employers request credit reports

FAQ Frequently Asked Questions for Pre-Employment Background Screening Below are answers to frequently asked questions about background screening and employment verification and how pre-employment background screening companies can help. Why do background checks? Conducting background screening on employees has become a matter of necessity for employers for several reasons.

Why do some employers request credit reports

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Why do some employers request credit reports

We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Employers sometimes check credit to get insight into a potential hire, including signs of financial distress that might indicate risk of theft or fraud.

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Why would an employer look at your credit? Credit checks are more likely for jobs that involve a security clearance or access to money, sensitive customer data or confidential company information.

Such checks also may be done by your current employer before a promotion. Get your free credit report and see where you stand What do employers see when checking your credit?

Potential employers see a modified version of your credit report, says Rod Griffin, director of public education for credit bureau Experian. An employer credit report does not show your credit score or disclose any account numbers. The report will show your payment record, the amount you owe and your available credit.

BREAKING DOWN 'Credit Report'

Does an employer credit check hurt your score? Businesses may get an employer credit report from one of the three major credit reporting bureaus — Equifax, Experian and TransUnion — or may use a specialty screening company.

But you will be able to see the soft inquiries if you request your own credit report. What are your legal rights?

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An employer must notify you if it intends to check your credit and must get your written permission. Several states and cities have laws prohibiting employer credit checks or restricting how the information can be used.

Several states and cities have laws prohibiting employer credit checks or restricting how the information from reports can be used.

If an employer might reject you based somewhat or totally on your credit report, it must tell you before the decision is made. The employer must wait a reasonable period — usually three to five business days — before it proceeds.

Final notice, right to free copy: After it acts, the employer must follow up with a post-adverse action notice, giving the name of the credit report agency, its contact information and explaining your right to get a free copy of the report within 60 days. Checking your own credit proactively lets you see what an employer would — and potentially fix any erroneous negative marks in advance.

Pay all bills on time. Payment history has the single biggest influence on your credit scores, so making on-time payments helps your score while also keeping delinquent marks off your report. Use available credit lightly. Monitor your credit report regularly. Some personal finance websites, such as NerdWallet, offer a free credit report and score that you can check whenever you like — giving you a way to regularly watch for negative marks in between the annual access granted by the credit bureaus.Credit reports.

Check your credit health. If you've ever applied for credit or a loan, there will be a report about you with a credit reporting agency which lenders use to assess your ability to repay credit. Your credit score and credit report are not interchangeable, even though many people use them that way.

Why Employers Check Credit — and What They See - NerdWallet

Your credit score, the three-digit number that signifies your loan-worthiness to lenders, is not part of the report that’s available to prospective employers. Jul 12,  · 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.

Apr 18,  · Before you apply for a job, it's a smart move to request your credit reports for two reasons: If there are errors on the reports, you can get them fixed (here's a .

The Americans with Disabilities Act (ADA) Amendments Act of was signed into law on September 25, and becomes effective January 1, Jul 12,  · 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.

Why Employers Check Credit — and What They See - NerdWallet