Employment Credit Checks and Your Job Search: an FAQ for You

According to a recent report by the Society of Human Resource Management (SHRM), 60% of employers run some kind of credit check on their new employees. For those that are struggling to make ends meet in the down economy, this news can be out-and-out scary. Below is a brief FAQ of information and resources to help you be a more knowledgeable applicant.

Why do companies run credit checks? The arguments for running employment credit checks are protection and personal judgment. In businesses where the primary function is handling sensitive client information (such as document shredding companies) or handling cash (such as banks or credit unions), proponents claim they value the information to assess the decision making ability and responsibility of the candidate. As the SHRM report cited above states, employers generally conduct credit checks for financial/fiduciary positions (91%), senior executives (46%), and those with access to high-level employee information (36%).

What do businesses look for in the credit checks? EmployeeIssues.com has a comprehensive breakdown of what is included in an employee credit check, including bankruptcies, child support payments, and loan and credit card accounts with payment histories. Not every report contains all of this information. The SHRM report also notes some interesting employee credit check data, such as only 11% of businesses consider foreclosures when hiring and no businesses considering medical debt. However, there have been reports that, in contrast to the data from SHRM, job seekers have been denied jobs based upon medical debt and foreclosures. This is why many states are passing legislation to protect those who have fallen on hard times.

What can I do to improve my credit report? This website offers excellent advice on how to improve your credit report, beginning with requesting a free annual copy from all of the major credit bureaus. You can use the report to look for significant errors including incorrect late payments and to insure the correct amount of outstanding debt. General advice from experts to maintain excellent credit include always paying you bills on time, working directly with your creditors if you get behind on your payments, and paying off your debt instead of moving it to lower-interest credit cards.

While employee credit checks are only part of a company’s hiring decision, it’s in your best interest to stay credit-vigilant when searching for a job and do your best to rectify any negative situations.