The Impact of Credit on Job Prospects
Credit is an important part of financial wellness that gets discussed frequently. Often, discussions center around building, improving and repairing credit, which are valuable components of your financial picture. However, credit impacts many aspects of our daily lives including renting, insurance rates and job prospects. This article will examine how and why credit can influence job prospects and share tips on building credit.
Why Employers Check Credit
You may ask yourself why employers check credit. The answer is quite simple: Your credit report reflects your level of dependability when it comes to keeping your promise to repay a debt. Often, that dependability — or lack thereof — will translate into other areas of life such as paying your rent or showing up to work as scheduled. Additionally, a credit check can help an employer verify your identity to be certain they’re hiring the right person. The credit check an employer does is called a soft inquiry, which will not impact your credit or credit score.
What Employers Can See
It’s important to understand what a potential employer may see when they check your credit as part of their hiring process. Employers can see identity verification information like your full name, current address and some previous addresses. In some cases, your current and past employers may show up on your credit report too. To get a glimpse of your reliability and financial responsibilities, potential employers may also be able see your credit accounts, payment history, balances, inquiries and bankruptcies.
While credit checks for employment may seem trivial, it’s important to understand that some jobs require specific levels of trust and security. Determining a job prospect’s financial status can help employers avoid potential problems that could arise from an employee’s debt situation such as accepting a bribe to disclose company information. While it may seem like an extreme scenario, this is a reality that some employers face.
What Employers Cannot See
A credit check is part of many hiring processes, so it’s important to know what employers cannot see when they run one. Employers are unable to see protected information such as your marital status, your race or your religious preference, because this information is not in your credit report. However, it is important to note that spousal information may be viewed if your spouse, or any other person, is listed as a joint party on a loan, such as a co-borrower or co-signer. In addition to those items, potential employers will not see your credit score, your income or any medical bills. An important note about medical bills is that while they may not appear on your credit report, they could be seen if they are delinquent (unpaid) and total over $500.
What You Can Do
Start now. Many people understand and know the importance of credit but choose not to begin building credit until they need it. Since credit impacts many aspects of our daily lives, it’s important to begin building credit as soon as possible before major financial responsibilities begin or ahead of employment interviews. When determining the best way to build your credit, do your research, speak with a representative at your financial institution, and take your time making your decisions on how to do so.
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