Credit tips for job applicants

You expect a bank or department store to look at your credit file when you apply for a loan or credit card. But what if you apply for a new job? Does your potential employer have a right to review your credit file?

The answer is, “Yes.” Federal law enables potential employers to review a modified version of your credit file, also called an employment report. However, they must first receive your permission in writing to do so.

Who uses employment reports?

Traditionally, the biggest users of credit files for employment purposes are companies in the defense, chemical, pharmaceutical and financial services industries because of the sensitive positions many of these employees hold.

Increasingly, however, other industries are using credit files as a general indicator of an applicant’s financial honesty and personal integrity.

What does an employment report include?

It includes much, but not all, of the information about your loans and credit cards that is listed in your credit file.

To protect your financial security, employment reports omit your account numbers. Some states specifically prohibit the display of account numbers on employment reports.

What other types of information are on an employment report?

The employment report can help verify information on a job application and provide a clearer picture of an applicant. It also contains data that is relevant to a potential employer. For example, the report lists an applicant’s current employer, his or her financial obligations, public record information (bankruptcies, liens and judgments) and past-due accounts.

An applicant’s payment pattern can demonstrate integrity. If the report indicates that personal finances are handled responsibly, the company may assume the individual will handle its financial affairs responsibly, too.