What Is An Employment Credit Check, And What Does It Reveal?

An Employment Credit Check – What Is It and What Does It Show?

It is possible that when applying for a job, you can be required to consent to an employment credit check. This enables a potential employer to access some of the records of your credit history. Credit checks are normally conducted for jobs that involve dealing with money, accounting tasks, or that require the employee to work with confidential information. However, any employer can legally ask for a credit check as part of the employment process.

What do you mean by an Employment Credit Check?

An employment credit check is a copy of your credit report obtained from one or more consumer reporting companies sent to your employer. These agencies' credit reference bureau also compiles personal credit profile data in particular reports used by creditors to assess risk and creditworthiness. The three main national consumer reporting companies are Equifax, Experian, and Trans Union.

Authorizing an employment credit check sends the employer your authority to one or more of these credit agencies, therefore obtaining your credit reports. Then, when they review your job application, employers might consult elements of your credit history. An employment credit check is not the same as a background check some companies might need, however.

What is reflected in an employment credit report?

Even though a credit report has a lot of data about one’s identity and financial situation, what the employer can request and consider is quite restricted.

Currently, employers in most states can only access what is known as a “soft inquiry” credit report for employment. Soft inquiries also have no impact on your credit score in any way. It is only possible to view your full reports if you are working on a job that needs national security or for managing this organization’s financial strategies.

For a standard employment credit check, employers will typically be able to see.

• Employment information – Your employer’s name, address, phone number, social security number, and date of birth. This helps confirm identity.
• Account types – The types of credit accounts that exist in the borrowers’ portfolio or existed in the past, like credit cards, retail charge accounts, automobiles, real estate loans, student loans, etc. The report will not reveal the specifics of each account.
• Credit history – Information on when and by whom your credit report has been requested. The employers can easily know whether other people have been viewing your history recently.
• Collection accounts – Bankruptcies, foreclosures, lawsuits, wage garnishments, and other public records that show up on your credit report.
• Account type – Whether accounts are open or closed and whether there are any delinquent payments. No particular details of the payment history are provided.

In soft inquiry reports employers will not be able to view account numbers, balances, amount of payment, or even the payment history. They also will not have access to your credit score.

That being said, let’s explore why employers conduct credit checks:

There are a few reasons why companies check credit for employment screening purposes.

1. Analyze credibility – Late payments, defaults, or even bankruptcies could pose a question to someone’s integrity. There are many different reasons why employers, for example, may wish to reduce the level of risk.
2. Reduce risk of fraud – In any organization, employers seek to minimize chances of fraud especially in positions where employees deal with money.
3. Implement credit checks - Some of the financial and legal positions call for a credit check. Those with severe credit problems may not be accepted.
4. Check the financial burdens – This pressure might influence performance in some jobs by causing extra debts and other financial strains.

Although credit history in most cases is irrelevant to the candidate’s skill set and integrity, it is used by some employers as a way to avoid potential risks when hiring for a significant position.

If you think that some questions that are going to appear in a check may be problematic for you, it will be better to be honest. Another area that has legal regulation addressing discrimination based solely on credit reports. With this in mind, ensure that you maintain a good posture and where necessary give more information.

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