Jun 22, 2021 02:10 PM EDT

Why You Should Focus on Your Credit While Job Searching

Why You Should Focus on Your Credit While Job Searching

(Photo : Why You Should Focus on Your Credit While Job Searching)

Your resume isn't the only thing that needs some polish before you start job hunting. Your credit report might need some TLC, too.

If you've borrowed money in the past, you're familiar with lenders needing to see this report. They check your credit to assess whether you can reasonably afford installment loans or lines of credit.

But lenders aren't the only ones to check your credit. Some employers may also take a look at your credit before they make a hiring decision. 

Why Do Employers Check Your Credit?

The hiring process is all about screening candidates to find the best possible fit for the position. Most HR professionals and hiring managers will focus on how you perform in the interview to make their decision.

But some look into your financial background to help them find the top candidate. That's according to the National Association of Background Screeners (NABS), which found 95 percent of companies perform some kind of background check on candidates during the hiring process. 

Sixteen percent of employers specifically check a potential new hire's credit. They do this to see if you're fiscally responsible or struggling with rock-bottom credit. 

This information might be pertinent if you're applying for a position in an accounting department. Some employers think how you've handled your personal finances will influence how you'll manage the company's finances in the future.

What Can They See?

The type of credit check an employer uses is vastly different from the one used by a financial institution before you borrow.

If you're applying for installment loans online, lenders may see everything in your file - from your three-digit credit score to your full borrowing history. 

This means they'll see payment history for other installment loans, credit cards, lines of credit, and auto loans in your name, dating back seven years. They'll get to see your account balances and delinquency rates because this information helps them determine your creditworthiness.

By comparison, your employer doesn't need to see as much to make their decision. As a result, employer credit checks won't share your score. An employer will only see the accounts you have open and their standings. 

Some states place greater restrictions on what employers see when they pull your credit. When it comes to the Fair Credit Reporting Act (FCRA), a federal law that applies to every state, employers can only run this check if they ask your permission. 

What to Do if Your Employer Checks Your Borrowing History

First of all, don't panic. If a check shows you have negative borrowing habits now or in your past, they won't necessarily cost you a job. Since your employer has to ask permission before they check your background, you'll have a chance to explain why your finances shouldn't take you out of the running.

You might be able to win over a prospective employer by being candid about your financial situation, sharing how you plan to get out of trouble. 

That said, everything is easier when you have good credit - from borrowing installment loans online to getting hired on the spot. With a flawless record, you won't have to justify your finances. Instead, you can let your CV do all the hard work.

Whether you're just starting your career, thinking of changing directions, or simply looking for a better job, remember to check your credit. If your score is on the low side, following these tips might boost your candidacy!

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