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Employers evaluate applicants based on skills, experience and attitude. For many jobs, what an employer sees on a resume and in an interview can be enough to make a decision. In some cases, however, your credit plays a role in your career prospects.
Potential employers can't check your credit score, but they can access a version of your credit report and use it to assess your judgment and whether you may pose a financial risk.
The interview process can be stressful enough as it is, so knowing what a potential employer can and can't learn about you through a credit check may give you one less thing to worry about.
Can Employers See Your Credit Score?
Potential employers will never be able to see your three-digit credit score when you apply for a job. They will, however, be able to look at a version of your credit report that's different from the one that lenders see. This modified report will exclude information such as your date of birth, account numbers, details about your spouse or anything that could potentially violate equal employment laws.
Since your credit score is meant to indicate your creditworthiness to a lender, it's not something a potential employer would use to make a hiring decision and is therefore not included in the report they see.
What Employers Can See on Your Credit Report
The modified credit report a potential employer can access will disclose personal information such as your name, address and Social Security number. It contains details about the debt you've incurred, including your mortgage, credit card debt and student loans as well as your payment history of those debts.
So, why might a potential employer want to access your credit report? An employer may do this for several reasons. If a job requires managing money, a credit report may indicate lack of financial responsibility or it may show financial distress that increases risk of fraud or theft.
By eliminating potential employees who have certain credit red flags, an employer can reduce its risk in hiring. If a credit report shows several late payments or something more severe, an employer may interpret that to mean an applicant may have poor organizational skills and follow through.
An employer must get consent from an applicant before running their credit. If an applicant is rejected based on information found in a credit report, the Fair Credit Reporting Act requires that the applicant be told and given an opportunity to dispute the information.
If you have a healthy credit history with minimal debt and no late payments, that may tell a potential employer that you have the responsibility and maturity it takes to thrive in the position they are looking to fill. A credit report that indicates responsible money management and organizational skills works in your favor, so it's important to know what's on your credit report and what you can do to improve it.
Essentially, a credit report helps a potential employer evaluate how trustworthy and responsible you are. It's particularly useful if you're applying for a job that will require you to work with sensitive customer data or manage financial information.
Does an Employment Credit Check Affect Your Score?
When you apply for a loan or credit card and the lender pulls your credit report, a hard inquiry occurs. Too many hard inquiries in a short period of time may temporarily lower your credit score. Fortunately, this is not the case with employer credit checks.
An employment credit check is known as a soft inquiry because it does not involve applying for new credit. Therefore, an employment credit check is not viewed as a potential flag for lenders and won't affect your credit score in any way.
Know What's in Your Credit File
Although it can be nerve-racking to know that a potential employer can view a version of your credit report, don't let this discourage you from applying for a job that piques your interest.
You can always check your Experian credit report for free to get an idea of what a potential employer may see and dispute any inaccurate negative marks beforehand. This may allow you to avoid unwanted surprises during your job search and give you the peace of mind of knowing you did all you could to improve your report.