People work hard to achieve and maintain good credit. When applying for a new job, it’s important to understand employment credit checks and their affect on credit score.
It is standard practice for potential employers to perform credit checks on applicants they’re pursuing. Credit checks can reveal potential risks for the employers, who are looking to protect themselves against violations of ethical standards or criminal behavior. If the available position requires a great deal of responsibility, such as government or financial work, employers may pay special attention to negative indications on a credit report.
The Fair Credit Reporting Act (FCRA) permits employers to request credit reports on job applicants and existing employees. However, under the statute, employers must obtain written permission from the individual, and they must also supply the applicant with a copy of the report if they choose not to hire.
Many job seekers are often confused about the difference between soft and hard inquiries into their credit. An employment credit report appears as a soft inquiry and does not affect the applicant’s credit score. Only a hard inquiry, such as a credit check for a loan or credit application, will actually affect an individual’s overall credit report. This is because a hard inquiry indicates the individual is actively searching for credit—and too many inquiries in a short amount of time can have a detrimental effect.
Job seekers should be familiar with their personal credit score when applying for positions. Those applying for high-ranking or financial positions should take actions to correct any red flags and ensure they maintain good credit. However, they need not worry about the possibility of an employer’s inquiry affecting their overall score.
