What to Know About Employment and Your Credit

Discussing her financial future

It's well-known that your credit health can affect your ability to get a loan or a credit card, but you may be surprised to learn it could affect your job prospects as well. Federal law allows current and prospective employers to view a modified version of your credit report for employment purposes. That can include during the initial hiring process and prior to promotions.

Employers can't view your credit score, but they can see credit data that's informative of your ability to manage money and responsibility. According to the National Association of Professional Background Screeners (NAPBS), 31% of employers will run a credit or financial check on at least some candidates for employment.

Can an Employer Access My Credit?

The Fair Credit Reporting Act (FCRA) lists who can obtain your credit report and for what purpose. Employers, for instance, are allowed to run a credit check for hiring and promotion decisions, but only if the applicant or employee has given written permission for them to do so.

In fact, there are only a few exceptions to the requirement to obtain permission before pulling a credit report, including:

  • In response to a court order or federal grand jury subpoena.
  • In connection with your application for a license or other benefit granted by the government, when consideration of financial responsibility is required by law.
  • In connection with a child support determination (in certain circumstances).
  • In connection with a credit or insurance transaction not initiated by you, when a firm offer of credit or insurance is extended and certain other restrictions are met.
  • For the purposes of a potential investor assessing the risk of a current credit obligation.

Also, creditors are allowed to run soft credit checks, which don't impact your credit, to send you pre-screened offers.

Remember, though, that while your employer can view a modified version of your credit report with your permission, they will not have access to your credit score.

Will Past Employers Appear on My Credit Report?

It is possible for current and past employers to show up on your credit report if they were listed on a credit application you submitted. Creditors commonly ask for employment information, which then may get passed along to the national credit reporting agencies and added to your credit file.

That doesn't mean all your past employers will be listed, though. Lenders aren't required to send employment information to the credit bureaus, so some choose not to. As a result, a credit report won't necessarily provide a complete history of your past jobs.

It's also important to note that your past and current employment doesn't impact your credit score in any way—the same goes for your income.

Other personal information you might find on your credit reports includes your name (including various aliases you've used in the past), Social Security number, date of birth and address.

Can My Credit Prevent Me From Getting a Job?

A bad credit history could hurt your chances of getting a job, especially if you're applying for a role in finance or management or a job with the government that includes security clearances.

That said, 47% of employers in the U.S. don't run a credit check on any employee candidates, according to the NAPBS. Also, many states and municipalities have laws against employers using an applicant's credit history against them.

If you're thinking of applying for a job, talk with the hiring manager to find out what's involved with the background check process, so you can know what to expect.

How Is My Credit Report Protected?

Because information found in your credit report is sensitive, federal law prohibits employers (and most others) from accessing it without your written authorization.

Additionally, before an employer takes an adverse action based on your credit report, it must provide you with a copy of your report, along with a summary of your rights under FCRA. You'll then have the opportunity to review the report and explain any negative information before the employer finalizes its employment decision.

Experian strongly recommends that employers do not deny employment solely on the basis of a credit report.

When an employer obtains a copy of a credit report for employment purposes, that soft inquiry will appear on your credit reports. Those inquiries won't, however, show up on the version employers see. This policy protects your privacy because other employers or creditors won't be informed about job-related activities.

Finally, inquiries for employment purposes don't affect your creditworthiness or credit scores.

What Else Do Employers Check?

There are several different types of background checks you may undergo when applying for a new job or a promotion. Depending on the employer and type of position, that can include:

  • Criminal background check
  • Fingerprint background check
  • International background check
  • Drug test
  • Sex offender registry check
  • Office of Inspector General background check (health care workers only)
  • Social media background check
  • Professional license background check

Again, you typically need to provide permission for an employer to run various background checks. You can ask beforehand what will be checked, so you know how much of your personal information is being shared.

Build Good Credit to Improve Employment Opportunities

Depending on the industry you're in, you may never have to deal with a credit check by an employer. However, if you're hoping to obtain a role in management, financial services or for a government agency with security clearance, it's best to work on improving and maintaining a good credit history.

Start by checking your credit score to see where you stand, then review your credit report to see which areas need some improvement. Also focus on making all your debt payments on time, keeping your credit card balances relatively low and avoiding new credit unless it's absolutely necessary.

Learn More About Employment and Your Credit

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through April 2022 at AnnualCreditReport.