Credit scores play a crucial role in almost all aspects of life. Whether you are looking to take out a mortgage for your dream home, get a loan for a new car, or rent an apartment, your credit score can affect your eligibility.
Can Employers Check Your Credit Score?
Many of us seem to believe that employers are allowed to check your credit scores. You may have been told that employers can ask you to sign a document that would allow them to check your credit scores. However, employers are not allowed to view your credit score.
In most states, however, employers can ask to view an applicant’s credit report. A credit report varies from a credit score drastically. The credit report that your lender receives is not the same credit report employers see. Instead, employers get an “employment screening” credit report.
Much of the data on a regular credit report and employment screening is the same, but not all of it. Your birthday is not listed in an employment screening and no soft credit check will occur, so nobody will know that an employer checked your credit report.
Why Do Employers Check Credit?
Depending on the job, an employer may correlate a healthy credit score to good money management skills. Also, if you are working in a highly secure position, they may want to ensure that you are not tempted with outside money offers to sabotage the company in any way.
Do Employers Check Your Credit Score?
Only a small amount of employers will check an employees credit. Credit checks are usually run by employers working in a high-security field such as defense or finance. However, most jobs will not ask for a credit check authorization.
How to Check My Credit
There are many great tools to check your credit scores. You will be able to track and manage the progress of your credit score. Checking your credit is a great way to ensure that no errors or mistakes hurt your chances of getting approved for a loan or credit card.
A credit score is a 3 digit number that an algorithm produces. The 3 major credit bureaus: Equifax, Experian, and TransUnion produce these scores using the FICO model.
The algorithm uses items from your credit report to calculate your overall credit score. Potential lenders can use to see if you are a trustworthy borrower.
The credit bureaus can produce a score using the FICO model and VantageScore models.
A credit report is a report of all your credit history. Essentially, it is a history or log of all your credit-related activity. A credit report will show your past and current accounts, how much you owe, and whether you have been making on-time payments. A credit report also shows if you have had any delinquencies on payments, any collection efforts, and bankruptcies within the past 7 years.
Why Do Employers Check Credit
Some employers, especially those in the financial sectors, look for employees who have a certain degree of trustworthiness when it comes to their own financial habits. It could look bad for a financial company to hire a person who has a record of multiple bankruptcies.
When an employer asks to check your credit report, they are essentially trying to get a better understanding of who you are. Various defense and pharmaceutical companies will also attempt to check your credit report.
What Rights do I Have?
As a potential employee, your employer must ask for your consent to check your credit report. There will be an entirely separate document for you to sign if an employer asks for your credit report. The employer will make it clear that they are required to run your credit.
How to Check My Credit
Looking to check your credit score? You can use free tools online that will provide you with your credit scores from most of the credit bureaus. We recommend Credit Sesame because they never ask for a credit card and their credit checks have always been free.
All in all, depending on your industry, there is a chance that an employer will ask to view your credit report. If you know that you will be asked to sign an authorization for your credit report, try and have any errors removed beforehand. You can always file a dispute with the report and you are required to receive a response within 30 days of filing a dispute.