I realize it may vary for different occupations. To what extent may it be used or considered? For many companies, a credit report has become a screening tool to evaluate a candidate and to exercise due diligence in the hiring process.
Employers seek credit reports on job applicants for a number of reasons. Some employers use a credit report to verify that an applicant is responsible and reliable or to confirm identity. Other employers are concerned about hiring persons who cannot manage their affairs, or whose monthly debt payments are too high for the salary involved. Many employers limit credit reports to management and executive positions, or to positions that have access to cash, assets, a company credit card, or confidential information. Employers are well advised to run credit reports on bookkeepers or others who handle significant amounts of cash.
However, employers should approach the use of credit reports with caution, and have polices and procedures in place to ensure that the use of credit information is both relevant and fair. An employer should first determine if there is a sound business reason to obtain a credit report. Unless the information in a credit report is directly job related, its use can be considered discriminatory. For example, running a credit report for an entry-level person with low levels of responsibility or no access to cash is probably not a good practice. Unnecessary credit reports can discourage applicants from applying, and running mass credit reports on all applicants, regardless of the position, can have the effect of discriminating against certain protected classes. In addition, employers should avoid making negative hiring decisions on information that is old or relatively minor.
A credit report typically contains four types of information. First, it gives identifying data, such as name, social security number, and past addresses. Second, it shows how persons pay their debts, such as by credit cards and personal loans, and what are their car payments, student loans, and mortgage payments. It also shows how much credit a person has been given, how much they currently owe, and whether debts have been paid late or sent for collection. Third, it will indicate who has requested a credit report. Finally it will report public records such as court judgments, liens and bankruptcies. Negative information will stay on a report for seven years, and bankruptcies stay for 10 years (although there are limitations to using a bankruptcy in an employment decision). For pre-employment credit reports, the three major credit bureaus use a special reporting format that leaves out actual credit card account numbers, credit risk scoring and age.
The job applicant must provide written authorization before an employer can request a credit report. If an employer intends not to hire someone based upon information in the credit report, then the applicant must first receive a copy of the report and statement of rights. The applicant has a right to review the credit report and to dispute any information believed to be inaccurate or incomplete. This right applies even if the employer had additional reasons not to hire the person or even if an applicant has excellent credit, but the employer has other concerns based upon the credit report, such as a reported high debt level. It may be, for example, that the debt level is overstated in the report. If a final decision is made, an applicant is entitled to a second confirming letter. In California, job applicants must also be given the opportunity to request a copy of the report free of charge if the employer obtains it.
Because of the potential for errors on credit reports, applicants have a right to review a report before it is used to affect employment adversely. Although the credit bureaus make efforts to be accurate, credit reports are based upon millions of pieces of data assembled by human beings and computers from sources all over the United States, and mistakes are always possible. Negative information may also be the result of a disputed bill, dissolution of marriage or some other problem outside the applicant's control.
Hope this answers your question! It can be used to make a decision on whether they hire you or not.
Your credit history, like to hear it or not, is a picture of how you conduct your life. |
