Having a bad credit history can affect your ability to get a mortgage, a car loan, a credit card and in a growing number of cases a job.
An increasing number of employers are adding a credit check to their background check reports, as unfair as it may seem. What can you do if you think (or know) that your credit score is not so great? 750 or above is good, anything under 620 is considered poor . Here are a few tips:
Before a prospective employer or staffing agency can run a credit check on you they have to obtain your express written permission. Without it the big three agencies – Equifax, Experian and Transunion – simply will not release the information to them, which means that if a prospective employer is going to take your financial health into consideration you will know about it.
What’s going to show up on the employer copy of your credit report? Almost exactly the same things as if you ordered a copy of the report yourself – except the credit reporting agency removes information that legally a prospective employer has no legal right to have; such as your age and marital status.
Otherwise it will all be there: mortgage, credit cards, student loans, your Victoria’s Secret line of credit (…oops you already revealed a little bit more about your personality than you might like). In black and white. Both good or bad.
Knowing what’s on your credit report before the employer does can help you a lot. Credit reporting agencies are far from perfect and many consumers really do have false or misleading information on their credit reports that can harm both their credit score and financial reputation. By law, you are entitled to a free copy of your credit report from all three credit reporting bureaus once every twelve months. If after reviewing your credit reports you find a mistake, you should contact the creditor that made the error to clear it up; and ask them to report the mistake to the three credit bureaus.
But how do you deal with questions from a prospective employer if real, but detrimental information does show up on your credit report? Honesty is the best policy every time. Acknowledge that at one time you did have financial issues but that they have (or are now) being resolved. People get laid off or get sick and accumulate huge medical bills. If you explain the situation behind the negative entry on your report it would be a hard-hearted employer who would hold it against you. And you might not want to work for them anyway.
There is by the way one other, slightly more unexpected way your credit report can trip you up in your job search. As you know when you apply for any line of credit you have to provide your current employment information. This information is passed along to the credit reporting agencies and it will appear somewhere on most credit reports. If you left a previous job off your resume – but it shows up on your credit report you may have some explaining to do that will be harder to talk your way out of.